Air Europa Settles State Debt After Turkish Airlines Deal. Air Europa sold 26% of its capital to Turkish Airlines and paid off its debts to the state. The company saved over €230 million on salaries through the ERTE scheme, but bonuses awarded to top management have raised questions.
Air Europa has completed one of the most significant deals in recent years: 26% of the airline's capital has been transferred to Turkish Airlines. This transaction enabled the company's owners not only to exit technical insolvency, which had arisen after the pandemic, but also to fully repay debts to the state, including interest on loans issued to save the business.
Saving on salaries
During the crisis, Air Europa actively used government employment support mechanisms. Immediately after the state of emergency was introduced in March 2020, the company placed 97.5% of its employees—about 15,000 people—on ERTE. Over three years, such measures allowed the airline to save more than 230 million euros on payroll and social security contributions. Exemption from social contributions alone brought the company around 40 million euros, recorded as 'other income.'
In 2021, the share of employees in full or partial employment mode was 12.5%, and by 2022 this figure rose again to 44%. In addition, Air Europa reached a separate agreement with unions on temporary staff reductions for organizational and production reasons, which made it possible to continue saving on payroll costs.
Management bonuses amid restrictions
While most of the staff was on ERTE (furlough), the management of Globalia—the parent company of Air Europa—approved bonus payments to top executives. According to internal sources, three executives received bonuses totaling 2 million euros for their role in securing 475 million euros in government aid. These payments were authorized soon after loans were received from SEPI, despite a formal ban on such rewards under the bailout program. During the same period, the company failed to pay the state 14.5 million euros in social contributions, and in subsequent years, this amount increased to 23.16 million euros.
Settlements with the state and new demands
The sale of the Turkish Airlines stake allowed Air Europa not only to repay the principal amount of its debt but also to pay out 97 million euros in interest on loans over five years. However, financial challenges did not end there: the company is demanding 75 million euros in compensation from the Ministry of Transport for subsidized routes to the islands and autonomous cities. These routes are unprofitable but maintained to ensure transport access for residents of the Canary and Balearic islands, as well as Ceuta and Melilla. According to Air Europa, the company has already submitted the relevant request to the government, but state authorities have not agreed to offset this with loan debts, citing different sources of funding.
The deal with Turkish Airlines became a key step for Air Europa, enabling the airline to emerge from a prolonged crisis and restore financial stability. However, questions about the fairness of fund distribution between employees and management remain a topic of discussion within the company and among industry observers.
