Spain Business
Spain Business Brief - Tuesday May 20 2008
By h.b.
May 20, 2008 - 12:49 PM

The President of Vueling, Josep Pique, has said that the current prices in the low-cost airline industry are unsustainable and insists that tariffs have to increase. Speaking in Bilbao today on Radio Euskadi, he said that the agreement for a merger with Clickair would be completed before the summer.
Pique said that there was a great deal of competition in the industry – almost perfect competition he said, but adding that there were too many companies, planes and routes in a Europe-wide price war.

The SEPLA pilots union has called off planned strike action which was to have cancelled 760 flights in Air Nostrum over days towards the end of the month and which was to have started tomorrow.
The company says it is now trying to get services back to normal as soon as possible.

Talks have broken down on an attempt to create what would have been the largest tourism group in Spain with a union between Air Europa and Halcón Viajes, with Viva Tours, Viajes Iberia and Iberojet. The resulting merged company would have been worth more than 6 billion, but an internal memo which was distributed among the workers in the Globalia group, and has been quoted by El Mundo today, has said the deal was off. Talks had been underway for about a month.

Industry in Spain has registered its first period of contraction in two years, with a fall in March of 8.2% compared to the previous year. The number comes from the National Statistics Institute INE.
Business including consumer goods was down 8.9% year on year.
However it was not all bad news with the numbers of orders in industry increasing in March up 3.2% over the year.

The purchase of Altadis by the British Imperial Tobacco saw a reduction in their profits of 117 million pounds in the six months to the end of March. The number was 43.5% down on the same period last year.

One in five Spanish youngsters is on the dole. The number is the highest seen across the 27 countries of Europe, and has jumped by 20.5% following the construction industry slowdown here. Latest European figures for unemployment as a whole show that only Slovakia has more unemployment currently.
Meanwhile some foreigners here are still finding work in Spain with 26,588 foreign workers joining the Spanish social security system in April. 21% of the workers were from the EU and foreign workers now make up 11% of the total number of people signed up to the Spanish social security.

Reports indicate that most of the EU is against any change in the Common Agricultural Policy, with the recent rises in food prices becoming the new main argument of those who defend the current policy. At a meeting in Brussels yesterday most of the Ministers rejected the calls for change coming from Britain which considers the common agricultural policy is contributing to the higher prices.
Spanish Agriculture Minister, Elena Espinosa, has expressed her caution at any relaxing of the rules, saying that would not necessarily help the problems on the markets.
Meanwhile the world bank has ruled out any intervention in the market, despite the recent high increase in prices.