Spanish carrier Spanair ceased operations on Friday (January 27) when Qatar Airways pulled out of months of negotiations to take over the loss-making airline and the Catalonian government refused any further support. Spanair, which was founded in 1986, is Spain’s fourth largest airline employing 2,000 people and flying nearly 13 million passengers in 2011.
Some 200 flights were cancelled and thousands of passengers were stranded – the government has stated it may fine the airline €9 million and cancel its licence for the abrupt grounding of its fleet. The Catalonia government has created a special committee to handle the suspension and assist Spanair passengers home, and also its likely forthcoming bankruptcy filing.
Spanair has said that it will refund most customers but it has done little to assist stranded passengers home.
The Catalan government and a group of local businessmen are Spanair's main shareholders, with a stake of 85.6%, Scandinavian airline SAS retained a 10.9% stake in the airline it sold in 2009. SAS issued a profit warning on Friday saying that it will write down €165 million of the outstanding debt and receivables on Spanair and set aside another €28 million in guarantees and costs linked to Spanair's bankruptcy.
Spanair’s fortunes have worsened in recent months as the government was unable to continue to prop up the airline as the Eurozone crisis escalated – the withdrawal of state funding and the breakdown in talks with Qatar led to the ultimate collapse of the airline.
This is the first collapse of a scheduled European airline for a decade and brings home the reality of the impact the Eurozone crisis is having on its airlines. European airline groups: Air France- KLM Group, Deutsche Lufthansa and International Consolidated Airlines Group, are dominating the European airline industry and as such many more second tier airline like Spanair face collapse if they do not embrace mergers with stronger competition or attracting equity investors. Middle Eastern carriers have shown increasing in buying up stakes in European airlines – Qatar bought a 35% stake in Cargolux last June, while Etihad has recently confirmed an increased stake in Air Berlin and rumours abound it is also interested in buying the Irish government’s 25% stake in Aer Lingus. Other airlines seeking investors are Malev and LOT, while TAP will soon be put up for sale.
One of the most profitable European airlines Ryanair, which issued record profits today (see below), commented that airlines receiving state support aren’t worth saving but that the exit of carriers such as Spanair would spur growth for discount carriers as they will open up slots and could help to lower fees at some airports.
Meanwhile in Asia, the return to democracy in Myanmar will lift fortunes of Thai Airways, SilkAir, AirAsia and Jetstar, with routes to the country being reopened. Thai AirAsia has already announced plans to add new routes into the country.
Although Myanmar has the potential to welcome the millions of tourists and business travelers experienced by its Thai neighbor, airport infrastructure is a problem. Only three airports in the country are able to handle A320s or 737s and none of them are near the country's beach centres such as Thandwe. However, this represents a real opportunity for airport and hotel investment into the country.