Loss-making Spanair insists it is not on the brink of collapse, despite receiving an additional €20 million ($27.5 million) injection from the Catalonian government amid widespread reports that without this investment the carrier could not survive.

The Catalonian government through investment fund ICF agreed last week to grant €20 million to Spanair shareholders to invest in the carrier.

One shareholder - Fira de Barcelona - has since ploughed €10.5 million of that capital into Spanair. The remaining €9.5 million investment "is expected soon", Spanair strategic planning director Jim Paton tells ATI.

Reports in the Spanish press quote the Catalonian government's main spokesman as saying that without the capital injection, Spanair would "have fallen".

However, Paton says the local government's investment is part of a €40 million capital increase agreed on by Spanair's shareholders last summer and upon which the carrier has been building its activities and growth plan.

The first half of that investment was made in November by Cimalsa, the infrastructure arm of the Catalonian government, drawing an accusation from the European Low Fares Airline Association (ELFAA) that Spanair was in breach of European Union state aid regulations.

"Spanair is enjoying a remarkable recovery and is not on the brink of collapse," says Paton. "We were the airline with the highest percentage growth in passenger numbers of all established airlines operating from Barcelona El Prat in 2010.

"The outlook for 2011 is even more promising and will see further international route development."

The latest capital injection has drawn scathing criticism from fellow Barcelona-based carrier Vueling. "I think it's very unfair in competitive terms to artificially continue with a project which has so many challenges," says Vueling chief executive Alex Cruz.

The carrier's president, Josep Pique, adds in a statement that the use of public funds to support Spanair is "unjustifiable".

"It is obvious that Spanair is overlapping on routes that already exist and that any pretension on its part of creating a hub in Barcelona is only believable to those who believe in promises that have nothing to do with the reality of the air transport sector," says Pique.

Source: Air Transport Intelligence news