The European Commission's (EC) desire to force Spain's Government to loosen its ties with the country's national airline, Iberia, is laudable. Its chosen method - to ask the Government to withdraw its nominated directors from Iberia's boardroom - is laughable.
Iberia is a classic state-owned airline in a classic situation. For decades, it has been, artificially sustained by the Spanish Government, not in the interests of providing Spain with an efficient airline, but in the interest of providing jobs and international prestige.
It is difficult to criticise the airline's management for failing to run Iberia at a profit - but all-too easy to criticise its political masters for using it as an instrument of social and diplomatic policy.
In that, of course, Iberia is little different from (and its owners little more blameworthy than) many across Europe. Where Iberia does stand out, however, is in the almost reckless fashion in which it has been allowed to compound its troubles through investments in other loss-making carriers.
Whatever the traffic sense which its investments in the two South-American carriers Aerolineas Argentinas and Viasa may have made, in financial terms they have been disastrous. First in Argentina and now, it appears, in Venezuela, Iberia has gone in as a minority shareholder and then been effectively forced by a dominant host-country government to take a majority position or lose its investment.
With three loss-making burdens to bear, it is easy to see how Iberia could spend another $1 billion - but $1 billion will not solve its problems. All a further tranche of state aid can do for an airline such as Iberia is prolong the unreality.
Iberia certainly needs help in addressing and overcoming its problems. The European Commission is better placed than most to engineer the provision of that help, but, alas, is unlikely to do so. For all its sabre-rattling over state aid, the EC has proved startlingly inept at interpreting and enforcing its own rules. It has yet to make any of its "last-chance" rulings on state aid stick, indeed, it has seemingly done its best, to let governments like that of France, flout them.
Under European law, the EC could refuse Iberia its latest requested lifeline - and, in the interests of the community at large, probably should. The refusal of approval of state aid need not mean the end of Iberia - merely the end of its present unhappy state. What it really needs is to be placed under administration and to undergo a court-enforced stripping-out of excess capacity, employment and unwise shareholdings. If the administrators need extra money to do those things, then the EC (having taken protective custody of the $1 billion with which the Spanish Government is obviously willing to part) could allocate it, subject to strict criteria and oversight, but only if the private investors who must eventually take control, cannot supply those funds in the short term. If the airlines of Argentina and Venezuela need bailing out, then their respective governments, should adopt the same tactics, but using their own funds, not those of European taxpayers. Iberia can be saved, but shuffling the deckchairs in the boardroom won't do it - nor will scattering dollars in the wind.
Source: Flight International
