Spain: Bankrupt Spanish Airline Halts Flights | Spain

Spain: Bankrupt Spanish Airline Halts Flights
Windsor Genova

Barcelona, Spain

Some 23,000 passengers of Spanair were left stranded across Europe and Africa or rebooking flights since Friday when the Barcelona, Spain-based airline abruptly stopped operations due to bankruptcy.

With its cancellation of 200 flights, Spain's fourth-largest airline faces $12 million in fines from the national government for abandoning service and violating the rights of its passengers.

The Catalan regional government, which has been subsidizing Spanair since 2009, decided to stop supporting the airline and Qatar Airways backed out from buying 49 percent of the airline for $197 million on fears that the European Commission will later charge it the amount of subsidy received by the airline.

Budget airlines Ryanair and Easyjet have complained to the EC that the subsidy from the Catalan government was illegal.

Spanair has a fleet of 36 leased aircraft and employ 4,000 people. However, the planes are not enough to pay $350 million the airline owes to creditors.

Spanair was set up in 1986 by Scandinavian airline SAS, which still holds 11 percent stake in the company. The initial service was between mainland Spain and the Balearic islands.

In the 1990s, the airline ventured into trans-Atlantic services to the United States and Mexico but failed to make profit. Financial condition worsened in August 2008 when one of its plane crashed after takeoff killing 154 people. Losses in 2009 reached $243 million and another $152 million in 2010.

Meanwhile, Vueling, Air Europa and Iberia airlines offered national and international flights to holders of Spanair tickets for $79 and $131, respectively.