If Charles Dickens were resurrected, he could write the history of two airlines.
He would say: "It was the best of times and it was the worst of times; the time of private capital increases and that of asking the taxpayer for ransom, the age of risking in your business and that of making cash and retiring; the spring of hope and the winter of despair ... we were going straight to Heaven, we were going headlong to Hell ... ".
That is exactly the situation for Iberia and Air Europa.
On Tuesday, IAG, Iberia's parent company, approved a capital increase of 2.75 billion euros to strengthen its liquidity that was backed by the main shareholder, Qatar Airways, which has 25% of the group.
A day earlier, on Monday 7, it was confirmed that Globalia, the holding company owned by the Hidalgo family that owns Air Europa, had requested 400 million from the State to maintain its activity.
In May, the Hidalgo airline already obtained a syndicated loan for 140 million that was also guaranteed by the State.
IAG's capital increase is an extraordinary demonstration of confidence in its management amid a tidal wave of airlines that are being rescued with public money.
As an exception, I am only aware of the case of the Ibero-American Latam, which has been subject to Chapter 11 of the US bankruptcy law since May and has obtained the support of its shareholders (including Qatar Airways) who have promised to contribute up to 1.7 billion, and EasyJet, which in June got 450 million from the London Stock Exchange.
The vast majority of airlines are currently being supported by governments.
Germany, France and the Netherlands have saved Lufthansa, Air France and KLM with 9,000, 7,000 and 3,400 million respectively.
Italy has renationalised Alitalia after verifying that no one was interested.
The Chinese government has entered Norwegian ownership.
The US has created a state fund of 21,000 million to which the three major airlines in the country have taken advantage: American, Delta and United Airlines.
The State Society for Industrial Participations (Sepi), whose presidency remains vacant, is studying Globalia's application.
The money will come from a fund endowed with 10,000 million euros.
At the moment, the process is not very transparent.
The criteria or the studies that merit why this money will be awarded are not known.
It is only known that if in 5 years, the Hidalgo family has not repaid 40% of the loan, they will be penalized with 10% of the credit and if after 7 years they have not repaid everything, the fine will increase even more.
But the conditions mean that the company will not be able to develop aggressive commercial policies in its sector or distribute dividends, a great argument to make it unviable.
It so happens that, at the end of 2019, a month before the pandemic, Iberia and Air Europa announced that the former would acquire the latter for 1,000 million.
The operation was considered a great deal for the sellers.
With this liquidity, the Hidalgo family could reorder Globalia and guarantee a great future for its members.
The pandemic has shattered their dreams, as Iberia maintains its interest in the acquisition, but by no means for the same price
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