Wednesday, February 8, 2012

Spanair - La Deuda de Todos

The Spanair debacle shows that perhaps Catalans' trust in their government is misplaced. The airline ate public money every year since its 2009 purchase and finally went bankrupt last month. Ferran Soriano, the former management consultant installed at the helm, comissioned turnaround studies by management consulting firms BCG and Europraxis which, as consulting studies do, predicted that profits would skyrocket. Meanwhile, the airline was no more operationally sophisticated than any of its peers and did not have a real value proposition besides having a hub in Barcelona.

Whether Spanair did not possess the expertise to implement the consulting advice or whether the profit forecasts were just pie-in-the-sky inventions is impossible to determine. But the government and Soriano were clearly out of their element. You should never buy an airline that costs 1 euro, precisely BECAUSE it costs 1 euro!!!

Even if the operation was somewhat political, as a new regime entered office and cut the faucet, Spanair was clearly not viable, ceasing operations with €350mn in debt and only €100mn in assets (they did not even own their fleet). In my mind, Catalunya owes its citizens an explanation.

For the full story, check out my article on Fair Observer:

No comments:

Post a Comment