Vueling best positioned to benefit from rival Spanair's abrupt closure
Airline's share price soars as it announces plans to add 33 flights
Every cloud has a silver lining and loss-making Spanish airline Spanair's demise has brought a golden opportunity for rivals such as Vueling, whose share price soared on Monday.
Vueling was quick to take advantage of Spanair's misfortune, announcing a 25-percent increase overall in its capacity for the summer season and 50-percent at Barcelona's El Prat airport, the hub of both Vueling and Spanair's operations.
In a statement to the National Securities Commission (CNMV), Vueling said it would be adding 33 scheduled flights. It is also planning to introduce five new routes: to Berlin and Hamburg from Barcelona and to Tenerife, Las Palmas and Lanzarote in the Canary Islands from Bilbao. Vueling had already been planning to expand this summer.
Vueling's shares closed up 25.0 percent at 5.10 euros after hitting an intraday high of 5.20 on volume of 2.1 million shares. The shares of IAG, the holding company for the merger of leading Spanish carrier Iberia and British Airways, were less favored, closing up only 0.66 percent on a day that coincided with another one-day stoppage by its unions to protest Iberia's plans to set up a low-cost airline. Irish budget carrier Ryanair closed up 0.04 percent in the London stock exchange.
Apart from the some 22,000 passengers left stranded on Friday, and about 4,000 people left out of a job directly and indirectly by Spanair's abrupt decision to cease operating on Friday night, the airline also left its rivals with a market of 4.3 million passengers a year out of El Prat, and a further 2.8 million out of Madrid Barajas airport.
"The disappearance of a competitor is good news for the rest of the airlines, especially at the Barcelona El Prat airport and above all for Vueling, which has its main hub at that airport, if it can fill the void left by Spanair," Spanish brokerage Banesto Bolsa said in a note to clients. "This won't be easy, however, as it will have to vie for the spot with Ryanair, easyJet, AirEuropa and Iberia, among other carriers."
However, Banesto said Vueling is better placed to take advantage of the opportunity as the market leader in Barcelona El Prat with a 23 percent share. It also shares some routes with Spanair.
Banesto raised its target price for Vueling's shares to 9.60 euros.
Ryanair has long complained about what it claims were state subsidies to Spanair by the regional Catalan government, one of its main shareholders. Deputy chief executive Michael Cawley said earlier this month Ryanair was in a position to take over some of Spanair's routes if it stopped receiving those subsidies.
Meanwhile, both Vueling and Ryanair said they would favor Spanair pilots, cabin crew and engineers in their recruitment plans. Vueling "will give priority in job interviews to increase its workforce to Spanair employees," the airline's CEO, Alex Cruz, said Monday.
