Business March, 24th 2010 by

Spanish budget airline files for bankruptcy

It has been three months since Air Comet, the budget Spanish air carrier, lost its license and ceased operations, but it finally filed for voluntary bankruptcy protection on Tuesday.

The airline, part of the failing Marsans group, which also owned Aerolineas Argentinas until an Argentine government takeover in 2008, was hoping to find a buyer or reach an agreement with its main creditor banks. Now, it has finally admitted defeat.

Air Comet, owned by the Chairman of the CEOE Employers’ Organisation, Gerardo Diaz Ferrán, owes 160 million euros to its creditors. One of the largest is Germany’s Nordbank. It also owes 16 million euros in unpaid social security and four or five million euros in unpaid wages to its employees, who will be able to receive their pay during bankruptcy proceedings.

Passengers affected by the collapse of the company can also apply to the bankruptcy court for compensation.

The bankruptcy court today said that the airline’s creditors could begin recuperating debts in April.

Despite the appearance of insolvency, however, observers have noted that the company could find itself with more assets than debt. Air Comet is still waiting to hear whether the Argentine government is going to pay the 220 million euros in compensation that it owes from Air Comet’s alliance with Aerolíneas Argentina.

In addition, Air Iberia, the Spanish national carrier, has applied to the company through one of its major creditors, Germany’s Nordbank, to rent three Airbus that Air Comet used for its short-lived Latin American routes. That rental will enable Iberia to extend its transoceanic routes and end two years of route reduction.

The bankruptcy proceedings may face some significant problems, however. The National Salary Guarantee Fund, which protects employees of insolvent companies, only reimburses the last 150 days of wages, but many Air Comet employees have gone for more than six months without pay.

The national fund has already begun processing backpay for about 600 Air Comet workers. About 76 have chosen to rescind their own contracts voluntarily.

The national court said today that it will also investigate whether it can take punitive actions against Air Comet and its owners. 

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