From Lifeline to Controversy: How Air Europa’s Public Financing Contract with SEPI Kept the Airline afloat Amid Pandemic Challenges

In November 2020, Air Europa signed a public financing contract with the State Company for Industrial Participations (SEPI) that has been critical to the airline’s survival during the Covid-19 pandemic. The aid, worth 475 million euros, was the largest granted by the Fund to Support the Solvency of Strategic Companies (FASEE) and aimed at helping companies affected by the pandemic.

The conditions of the aid were strict, with SEPI requiring guarantees from Globalia airline. Allegations that President Pedro Sánchez’s partner, Begoña Gómez, had favored Air Europa have been denied by members of the Executive. A complaint by the pseudo-union Manos Cleans against Gómez for alleged influence peddling led to legal proceedings, but the Prosecutor’s Office requested its dismissal.

Prior to receiving public support, Air Europa underwent audits by Cuatrecasas, PwC, and the State Attorney’s Office to assess its eligibility and viability. The management council of FASEE and the Council of Ministers also reviewed these reports. As a condition for receiving SEPI aid, Globalia had to allow SEPI entry into its management with representation on its board.

The SEPI public credit was a last resort for Globalia as it had exhausted other financing options. The contract required specific allocation of funds and SEPI approval for key decisions such as asset sales, changes in corporate structure or appointment of auditors. SEPI played a decisive role in approving significant financial and strategic decisions for Air Europa.

Air Europa had previously secured bank financing through ICO before signing up for SEPI aid. The company returned part of the loan and faced legal disputes related to Covid-19 impact on its hotel and transportation activities. The SEPI aid agreement included fixed and variable interest rates along with SEPI involvement in key management decisions. This financial commitment was vital for Air Europa’s survival during these challenging times.

In conclusion, Air Europa’s survival during this pandemic was possible thanks to a crucial public financing contract signed between it and SEPI in November 2020. Despite controversy surrounding allegations against President Pedro Sánchez’s partner Begoña Gómez, this assistance proved essential in helping Globalia navigate through tough times with stringent conditions attached to it that allowed them to make significant financial commitments while having access to critical decision-making processes within their organization.