Spanair aims for profitability within two years

This story is sourced from Pro
See more Pro news »

Loss-making Spanair has hit back at critics who claim it is on the verge of bankruptcy, insisting that it is "here to stay" and aiming to return to profitability within two years.

Speaking to ATI at Spanair's headquarters in Barcelona, Spanair strategic planning director Jim Paton said the carrier was working on a new business plan for the next five years and expects to become profitable during that period.

"We aim to be turning a profit within 18 to 24 months," says Paton, adding that earnings before interest and tax (EBIT) for the second half of this year are up €40 million ($53.5 million) on the same period in 2009. "I can't comment on the figure for 2010 but it will be a significant improvement on last year."

Spanair was acquired from SAS in early 2009 by a group of Catalonian investors for a token fee of €1. Its current ownership structure comprises a mixture of public and private investors, but when stakes belonging to local government agencies are added together the Catalonian Government can just be seen to have the largest shareholding.

Cimalsa and Avancsa, both regional government agencies, own 17.8% and 8.9% of Spanair, respectively. Turismo de Barcelona and Fira de Barcelona - both of which are 50% publicly-held - each hold a 13.4% stake. Private investors Catalana d'Iniciatives and Volcat 2009 hold 10.7% and 20.8%, respectively, and SAS continues to hold 11.9%. The remainder is held by Spanair employees.

The strong local government involvement has led to controversy, with the European Low Fares Airline Association (ELFAA) last week complaining that Spanair had breached European Union state aid regulations when Cimalsa was authorised earlier this month to invest €20 million in the carrier.

These complaints are dismissed by Paton. "Our ownership is a mix of public and private shareholdings - we are by no means a fully publicly-funded airline," he says. "There is nothing fundamentally wrong or forbidden under European law in terms of public bodies investing in companies such as ours."

Since its acquisition from SAS, Spanair has been focusing on reducing its cost base, increasing its international network and working towards launching long-haul flights from Barcelona. Paton says the airline has "reinvented" itself since the crash of one of its Boeing MD-82s at Madrid Barajas Airport in 2008.

"This is a different company to the Spanair of 2008. Most of the leadership team has been here for less than 18 months," he notes. "We look back on that day with sadness but we as a company have moved on.

"The last of the MDs will retire in less than 18 months. This chapter in Spanair's history will then be definitively closed, giving way to success as the leading network carrier in Barcelona."