Air sector: Sepi disembarks at Air Europa appointing two directors and negotiates the future CEO
2020 ends with what was promised would be the largest operation in the airline sector of the year without closing.
The Government, Air Europa and Iberia negotiate the last fringes for the definitive purchase of the first one, from the Globalia tourist group, by Iberia, from the IAG group.
Job cuts are the last obstacle to closing the operation
, which was announced a year ago, was paralyzed by the pandemic and Iberia finally conditioned the rescue of Air Europa by the Government.
This one was announced more than a month ago.
It will be done through the rescue fund for strategic companies managed by the Sepi (Sociedad Estatal de Participaciones Industriales) and
gave the Government decision-making power in the management of the airline
, including the sale to Iberia or any initiative to cut staff.
The problem is precisely in the fine print of this rescue, because the Executive, which has injected 475 million to the airline, does not want layoffs to be financed with public money, but
Iberia, on the other hand, knows that it has to make adjustments so that the operation compensates you.
"The political aspect, this negotiation with the Sepi, is the one that remains pending, and in reality it is the most delicate issue, because
the state injects money into a company so that it does not go bankrupt and save jobs, but whoever buys has to getting value out of integration
and thinning the company ", says Philip Moscoso, an expert in the airline industry at IESE.
In his opinion, it is this friction point "that is being negotiated. The rescue of Air Europa came with conditions and the Executive wants to have a voice and vote, but Iberia does not want them to be imposed with directors who could restrict their management efficiency" he points out.
State presence
In exchange for the bailout, the Government would appoint two Sepi advisers to Air Europa's board of directors and
would have a say in the appointment of its CEO and in the aforementioned cuts
.
Last week the airline already appointed this new council, which has two members of the state society.
Lack to elect the CEO.
"Iberia proposed the purchase because Air Europa was strong in Latin America, to move it away from the southern cone and get rid of a competitor from above.
It is interested in its slots and its routes, but not its staff
, and in the current context it is evident that they are not leaving to keep all jobs, "says Marco Taboas, an expert in the airline industry.
Luis Gallego himself, CEO of IAG and president of Iberia when this operation was conceived, has acknowledged that Iberia will also have to make adjustments, although he has never specified how it will affect the workforce.
"They
are
probably
waiting for the Air Europa purchase to close to do those calculations,
" says Taboas.
The operation was announced in November last year.
Iberia offered 1,000 million euros for the airline to the Globalia group.
"For Globalia, which in its best year had a profit of 56 million euros, it was a very good opportunity while Iberia absorbed a competitor," says Taboas.
Operation of the year
While waiting for Competition to approve the operation,
the pandemic broke out, causing the greatest crisis that the airline sector has ever experienced
: several airlines have already gone bankrupt, millions of jobs will remain along the way, routes will be closed and will cause concentration within of the sector.
The airlines have spent months with a large part of the fleet on the ground and more than 70% of their workers in ERTE situation.
The sector does not believe that the situation will improve between now and 2023 and all are cutting costs
, personnel as well, even those that have received public money, such as the German Lufthansa or the Dutch KLM.
This has complicated
a purchase that was once sold as a strategic operation with great benefits for Spain.
Luis Gallego has always defended that the company still had a value for Iberia but that the conditions of the agreement had to be renegotiated.
Air Europa is no longer worth the 1,000 million that Iberia initially offered for it.
In addition, flights to Latin America are at a standstill and long-haul traffic is not expected to pick up anytime soon.
In fact, it will be the last to do so.
Social pressure
"The operation is going to close, and there is also a lot of social pressure, because
without this purchase, not only Air Europa's workforce is put at risk, but that of the entire Globalia group
," says Taboas.
Gallego has always defended the strategic interest of this union.
In the first place, because it would allow Iberia to extend its tentacles in the southern cone and push away its competitor.
Secondly, because it would allow both companies to create a
hub
(traffic connection center) in Barajas and would put Madrid at the level of the four largest centers in Europe: the airports of Amsterdam, Frankfurt, London Heathrow and Paris Charles De Gaulle .
Between Iberia and Air Europa they would control almost 60% of Barajas traffic and more than twenty routes from Madrid to Europe and America.
For this reason,
"the purchase will be effective, because it continues to be of interest,
but that happens by making the company thin," says the expert.
Moscoso clarifies that, even so, companies
"have to be careful in the adjustments to be able to return to activity when demand grows.
If you renounce take-off and landing rights, sell airplanes and fire pilots, this will not later it is achieved overnight. "
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