It has been more than a year since four large companies, Ávoris, Plus Ultra, Duro Felguera and Air Europa, received funds from the State Industrial Participation Company (SEPI), as a last resort to strengthen their finances weighed down by the collapse of economic activity in March 2020, as a consequence of the pandemic. For this reason, as all the rescued companies will have to do, they have to report on the destination of the aid provided by the Solvency Fund for Strategic Companies of a maximum distribution of 10,000 million euros and which is managed by the State Society of Industrial Holdings (SEPI).
The SEPI approves the rescue of the regional airline Air Nostrum for 111 million
They have that term because the Executive set it out in the Agreement of the Council of Ministers, of July 21, 2020, which establishes the operation of the Solvency Fund. He considered that “to ensure due transparency”, companies that receive aid must publish “in their corporate portals, information on the use of the aid received within a period of twelve months from the date of granting the aid and, subsequently, of periodically every twelve months, until full reimbursement of the aid”.
In addition “in the case of large companies, such advertising will include information on how the use of the aid received supports their activities in line with the EU objectives and national obligations related to ecological and digital transformation, including the objective of the EU to achieve climate neutrality by 2050”.
A wide margin of maneuver that means that the information published by the first companies rescued by SEPI is not entirely homogeneous. Nor is it one of the most prominent and easily accessible information on their web pages, although the four companies that have already completed at least one year of rescue do provide information on their corporate portals.
The two loans for Air Europa
By amount, the most relevant bailout, so far -because SEPI continues to study and grant aid-, has been that of Air Europa. In total, 475 million euros that the Executive authorized on November 3, 2020 and that were vital to sustain the airline after the pandemic momentarily left its merger attempt with Iberia in the air, whose negotiations broke down and They resumed months later.
The airline of the Globalia group breaks down that the aid was channeled through a participating loan amounting to 240 million euros and an ordinary loan of 235 million. The company, on its corporate portal, justifies the aid for being a key company in the air interconnection of Spain. “In the months prior to the pandemic, Air Europa was emerging as the second Spanish airline with the highest number of authorizations to fly to international destinations: a total of 130 in 60 countries, which implies a significant impact on the Spanish tourism sector, since that a high proportion of its passengers is linked to tourist and leisure destinations. Its dimension in terms of income was also very relevant since it represented, at that time, 18% of the global figure for all Spanish airlines”, he argues.
In addition, Air Europa states that “it is relevant in Spanish air transport, both due to the volume of passengers transported, the markets and the routes served, and significantly due to its position and contribution to the Adolfo Suarez-Madrid Barajas airport, ‘hub ‘ of its intercontinental flights, basically to South and Central America”. In fact, the relevance of the Barajas hub has been one of the keys to keeping negotiations with Iberia from breaking down, because the Government has considered the merger to be strategic.
“The destination of the funds has been to prioritize the continuity of the company’s activity while demand begins to recover and attending, to the extent possible according to the evolution of the situation at all times, to the investment plans in matter both of ecological transition (target reduction of CO2 emissions), and of digital transition”, explains the company. “Likewise, a significant percentage has been allocated to refund the money to passengers affected by cancellations derived from COVID-19,” he says.
Like the rest of the companies where the rescue has completed a year, Air Europa breaks down the destination of the funds between operating expenses, those derived from its activity, although it does not give more details. It has dedicated 73% of the funds to the latter. The other 27% has gone to non-operating expenses where it includes, points out, reimbursements, payroll, taxes, social security, ecological and digital transition, financial.
The weight of tourism in the economy
The second rescue, in economic weight, is that of Ávoris, the tourist group formed by the integration of the agencies of Halcón Viajes (also of Globalia) and the Barceló group. The second with a majority stake, 50.55%. Ávoris received, in total, 320 million euros through two loans and, despite this, he currently has on the table the development of an Employment Regulation File (ERE), pending negotiations with the representatives of his staff.
As in the case of Air Europa, Ávoris justifies the need for state aid due to the weight of tourism in the economy and the impact that the pandemic has had on it. “In 2019, it represented 12.4% of the national GDP (154,487 million euros of activity) and absorbed 13.7% of Social Security affiliation, being the main direct employer with 2.7 million people”, indicates . “In that same year, Spain ranked second in the world in spending by tourists, with 89,856 million euros, and was also the second country in the world that received the most foreign tourists, more than 83 million,” he points out.
And that’s where the virus hit: “COVID-19 has had a great impact on the tourism sector, with an estimated 60% to 80% drop in 2020 compared to 2019.” In this context, he points out, “tour operators and travel agencies are a fundamental part of the consolidation and recovery of the sector, being a fundamental part of the intermediation of the offer, so it is essential to maintain and provide support to those companies that can to contribute to boosting the activation of the tourist offer again at the moment in which the demand becomes more dynamic”.
It also justifies that Ávoris is a key company. “The strategic nature of Ávoris is undeniable, since it has a notable presence in international markets, a relevant market share, a large volume of business (4,067 million euros of aggregate turnover in 2019), a significant number of direct employees (6,400 workers) and a large scale in terms of points of sale (1,470 in its commercial network)”, he stresses.
So far the justification. Regarding the destination of the funds, he assures that “it has been to prioritize the continuity of the beneficiary’s activity and cover the working capital needs of the Ávoris group, while demand recovers”. Specifically, “83% of the funds have been allocated to payments for operating activity while the remaining 17% have been dedicated to non-operational payments”. Among the latter, appointment without specifying, payroll, taxes, social security, reimbursements, financial.
40% of the aid to Plus Ultra, for its creditors
The third bailout that is one year old and, also, linked to the tourism sector, is that of the Plus Ultra airline, which reached 53 million euros and which, until now, has been one of the most controversial aids, for lead to dark spots. Approved in March 2021, it led to a political storm, for being a company linked to Venezuelan businessmen considered close to the Government of Nicolás Maduro and having as a creditor a company in Panama linked to former figureheads of former Minister Rodrigo Rato.
Plus Ultra breaks down that the total of 53 million euros in aid “has been divided between an ordinary loan of 19 million euros with a term of 5 years and a participating loan amounting to 34 million euros with a term of seven years.” As in previous cases, it recalls the weight of the tourism sector in GDP and, regarding the company, justifies its “strategic nature” by shielding “alternatives, frequencies and prices for a connection market as important as Spain’s with Latin America”.
“Our presence guarantees the proper functioning of the market. In addition to the importance of the sector, as a company, in the period prior to the pandemic, we were the Spanish air transport company with the highest growth in recent years, serving routes not served by other operators. On average, our presence in the markets we serve is 21%, with clear growth trends”. And, looking ahead to the summer of this year, he assures that he will resume “thanks to this financing, our plan to open new routes, incorporating four new destinations to our regular line in Colombia and the Dominican Republic.”
The airline indicates that “the destination of the funds, mainly, has been assigned to the payment of debt contracted with our creditors”, which has concentrated 40%; operating payments, 22%; in addition to the reimbursement of passengers and working capital, both, 19%.
Duro Felguera dedicates 69% to operating costs
The only industrial company that was rescued more than a year ago is Duro Felguera, with 120 million euros approved in March 2021. In its case, “this temporary public financial support has been articulated in two phases.” The first, it indicates, a participative loan of 20 million euros and an ordinary loan of 20 million euros, both received in May 2021; and a second phase, completed on November 29, 2021, which involved the disbursement of an additional 80 million through a participatory loan. Funds distributed among different companies of the group: Duro Felguera, DF Mompresa, DF Operations and Assembly, DFOM Biomass Huelva, Duro Felguera Calderería Pesada and Felguera IHI.
The company justifies its economic weight because “its importance in the economy of the Principality of Asturias is key, where in 2019 it represented 1.18% of the Gross Added Value of the region, 1.02% of total employment and 3.8 % of their spending on R&D&i of that made in Asturias. In the period 2011-2016, it reached contracting levels of an average of 850 million euros and generated some 5,200 jobs between direct, indirect and induced”, although it does not break down between these categories.
Regarding the distribution, Duro Felguera indicates that 69% of the funds have gone to costs derived from operational activity, and the rest to non-operational payments, which include reimbursements, taxes, social insurance, ecological and digital transition and financial. “The destination of the funds has been to prioritize the continuity of the company’s activity, attending to boosting the growth plan in contracting and in the execution of projects, aligning it with the energy transition and digital transformation,” he argues. What Duro Felguera does not break down -nor do the other three companies- is how they are focusing their climate transformation, until they achieve zero emissions in 2050 as required by Brussels.