THE EUROPEAN Commission (EC) and the Spanish Government have finally agreed on a rescue plan for Iberia, ending nine months of often, acrimonious negotiations.
The key to the agreement is the EC's definition of the agreed Ptas 87 billion ($600 million) cash injection as a "capital injection", rather than state aid. The money will be advanced by Teneo, Iberia's state-owned parent, and is being regarded by the EC as a business investment. The EC has also agreed to a further Ptas 20 billion injection in 1997 "on the basis of the achievement of the financial and other indicators" for the years 1995 and 1996.
Last-minute difficulties emerged when Spanish transport minister Juan Manuel Eguiaguaray threatened legal action if Brussels continued to block the agreement, saying that the Government would press ahead, without EC approval, with the full Ptas 130 billion cash injection originally requested, if necessary.
The EC also insisted that Iberia reduce "substantially" its interests in Latin American airlines, in particular that in Aerolineas Argentinas. The EC says that this has been accomplished, and that "...a capital injection into the restructured Iberia group could be considered on commercial grounds", since the risks associated with the Latin investments had been substantially reduced (the shareholding has been taken over by Teneo).
The money will go towards improving the financial structure of the airline.
The decision has been condemned by Europe's privately owned airlines. British Airways chairman Sir Colin Marshall describes the move as "...an amazing decision which further sets back the prospect of fair competition in Europe."
Source: Flight International