TENSIONS ARE rising between the Spanish Government and the European Com- mission (EC) over the long-awaited decision on state aid for Iberia, with Spain raising the threat of legal action if Brussels continues to withhold approval.

The issue hit the headlines, after transport minister Juan Manuel Eguiagaray suggested that, Spain was prepared to press ahead with the Ptas 130 billion ($1 billion) aid, regardless of EC approval.

"Iberia cannot wait for clearance, nor can the Spanish Government accept treatment that discriminates against it, compared with other European airlines," he says referring to approval of a string of other state-aid cases.

An Iberia shareholders' meeting has already been called for 23 December to approve the cash injection, despite the lack of EC approval, although a decision is understood to be imminent.

Tensions have been further raised by indications from Brussels that the EC is planning to limit the cash injection to less than Ptas 100 billion. Iberia received Ptas 120 billion three years ago.

The airline is arguing that the latest cash injection is not more Government aid, but a business investment by its state-owned parent, Teneo.

Teneo has also agreed to step in to relieve Iberia of its majority stake in Aerolineas Argentinas, providing the Spanish carrier with around $300-400 million.

Source: Flight International