Spanair says profitable if oil stays below $120

August 11, 2008

, MADRID, August 11 – Struggling Spanish airline Spanair, a subsidiary of Scandinavian carrier SAS, will be profitable only if oil remains below 120 dollars a barrel, managing director Marcus Hedblom said in an interview on Monday.

Spanair has presented a restructuring plan involving the shedding of 954 jobs in its 4,000-strong workforce as well as several destinations because of soaring fuel prices and decreasing demand.

"With the plan that we have put forward, the company can manage with a barrel of oil at 120 dollars, Hedblom told the Cinco Dias business newspaper.

"Spanair will only be profitable with oil at the level it is today," or 117 dollars the day of the interview.

The airline, the second-biggest in Spain, posted net losses of 41 million euros (62 million euros) in the first quarter. It is to announce its second-quarter results on Thursday.

Hedblom said the carrier was also suffering from excess airline capacity in Spain as the country\’s economy suffers an abrupt slowdown after a decade of strong growth.

"We operate the same routes as Clickair, Vueling, Air Nostrum and Iberia. When the economy was doing well, that allowed us to post profits. But today, there are too many planes and routes" at all the airlines.

"It\’s a phenomenon that only exists in Spain, where there is an extraordinary surplus of companies offering the same thing," he said.

On June 19, SAS announced that it was abandoning plans to divest Spanair as it was unable to secure a good price given current difficult market conditions.

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