Air Nostrum has made a partial early repayment of €20 million to Spain’s state-owned holding company, SEPI, reducing the balance of a €111 million loan granted during the COVID-19 crisis.
According to Spanish news agency EFE, the payment was executed on Monday and applies to funds provided by the Strategic Companies Solvency Support Fund (FASEE).
In addition to the principal repayment, the Valencia-based airline paid €809,550 in interest corresponding to the amortised portion of the debt.
The company confirmed that following this transaction, the outstanding principal stands at €91 million.
The loan was part of a broader public aid package designed to sustain strategically vital enterprises during the pandemic, which caused severe disruptions to air travel across Europe and the world.
Pandemic losses and operational disruption
Air Nostrum was one of the carriers hardest hit by the demand crash caused by COVID-19 restrictions.
The company was forced to cancel all flights for a period of several months and reported losses of 140 million euros in 2020.
However, once operations reopened, it was only under extreme conditions, with limited seats on board and very few destinations available, even within the airline’s standard network.
The company’s liquidity and balance sheet suffered due to a reduction in sales and ongoing fixed costs.
Air Nostrum was able to continue operations during the health crisis thanks to government funding and support.
Approval and appraisal of the loan
The participatory loan was granted on May 31, 2022, following a thorough evaluation of Air Nostrum’s financial and legal standing.
The assessment process took 13 months and included an examination of the airline’s viability strategy.
SEPI conducted the review with the assistance of Grant Thornton, who served as an external adviser hired particularly for the purpose.
The decision represented the authorities’ determination that the company met the FASEE fund’s eligibility requirements and had a viable path to long-term survival.
Restructuring the repayment terms
In December 2024, the loan repayment plan was revised with no write-downs.
The remaining debt and interest were to be paid in one lump sum in 2028, according to the new terms.
The early repayment announced this week reduces the amount due at maturity and represents progress in Air Nostrum’s efforts to restore its financial situation following the pandemic.
Increased debt due to COVID-19
SEPI’s participatory loan was not the only source of financing for Air Nostrum throughout the crisis.
In 2020, the airline also signed 133 million euros in loans secured by guarantees from Spain’s official credit institute, the ICO.
These arrangements were made both with commercial banks and directly with the ICO.
Air Nostrum has repaid 75 million euros in principal on these ICO-backed loans, as well as 23.6 million euros in interest.
These repayments are part of the company’s overall endeavour to lessen the financial burden incurred during the pandemic.
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