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Airlines seek investment to stop Spanair collapse from triggering a trend of failed airlines.
BRUSSELS, Belgium – The sudden collapse of Spanair over the weekend left over 20,000 passengers stranded around Europe and North Africa.
Now industry insiders are wondering if the Spanish airline’s demise could be the first of many, as cash-strapped European governments can no longer afford to keep failing carriers flying.
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“As the economic noose tightens around European airlines, the industry’s ranks look set to thin this year,” the aviation intelligence provider CAPA wrote on its website Tuesday. “Governments are now reluctant or unable to prop up their ailing national airlines as the debt crisis forces unpopular austerity programs right across the economy.”
Spanair filed for voluntary bankruptcy on Monday, declaring debt of 474 million euros. That followed Friday’s collapse, when all flights were halted after talks with Qatar Airlines on the purchase of a 49 percent stake in Spain’s third-largest carrier broke down and the regional government in Catalonia refused to support the airline with more funds.
Catalonia is a major shareholder in Spanair and had invested 140 million euros in the airline. However, the regional government is itself heavily in debt, and is facing austerity measures as part of Spain’s efforts to cut public spending.
The Spanair collapse has highlighted the plight of airlines across the continent, with governments from Portugal to Poland seeking private investors to save troubled carriers.
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The Hungarian airline Malev appealed to its government for help on Monday after acknowledging that its finances had become unviable, but the government in Budapest is facing one of Europe’s most acute budget crunches and previous subsidies to the airline were declared illegal by the European Union.
The government in Warsaw is hoping to complete the privatization of the loss-making LOT Polish Airlines by the middle of this year, with Turkish Airlines among the frontrunners to buy.
Portugal aims to start the privatization of TAP Air Portugal this year while the Irish government is mulling the sale of its 25 percent stake in Aer Lingus. The Czech Prime Minister Peter Necas last month said privatization is the only way to save the CSA airline.
Despite the suffering of such venerable national flag carriers, a number of low cost upstarts are thriving.
Ireland’s Ryanair on Monday posted a third quarter profit of 15 million euro along with a 13 percent rise in revenues and Norwegian Air Shuttle last week ordered 222 airlines from Boeing and Airbus in what it touted as the biggest single order ever placed by a European airline.
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