Communication Strategy: Capacity Cuts and Labour Restructuring

1. Communication Strategy:Capacity Cuts and Labour Restructuring Barcelona, 20 July, 2009

2. The Story Line Spanair is under new ownership, new management, and has a plan to address a business transformation for future success and growth The first steps require a new network proposition, requiring less aircraft, adapted to demand, yield and future market and economic conditions Additionally, simplification of the business and significant cost reductions are required We need to engage unions, as well as other stakeholders (trade, suppliers, institutions) to drive a clear message: new ways of doing business are required to secure investment and provide a sustainable future in our relationships Many of our conditions (collective agreements, supplier contracts, processes, etc.) are not reflecting the current and future business needs. The ‘new order’ is driven by operating a simplified, cost competitive and attractive commercial proposition with BCN as the core strategic opportunity

3. Specific Actions Labour Restructuring: BCN Relocation Process in place with 22JUL as deadline to send individual relocation notices Negotiations driven to achieve minimum legal compensations Authorities are evaluating imposing a delay due to a ‘second ERE to be announced soon’ We will continue to drive our schedule so that by 15SEP staff begins to work in BCN unless official notice is given before 22JUL Labour Restructuring: New Conditions for Pilots, TCPs and TMAs Meetings have started to explain the current situation and measures to be taken A good investment case to attract capital requires significant changes in labour conditions, adapted to a new environment (less demand, declining yield, efficient and cost competitive players) New agreements reflecting these conditions are required before capacity is reduced (30OCT) An ERE will be required, but, by itself, it is not sufficient to position the company for the future and attract investment We need to step away from an ‘ERE negotiating mentality’: Only interested in improving severance compensation for those who leave… not in the future of the business

4. Communication Tactics Continue to meet with unions and present the case: collective agreements must be updated to market conditions, attract investment, and implement all the viability measures We need to secure these agreements before negotiating an ERE: this will ensure the ERE is applied in the most efficient and cost effective manner The ERE does not to be openly presented (authorities and unions) until 15 days before its application, provided we secure agreements with key unions between now and mid September Not opening the ERE negotiations now, provides less arguments for the authorities to delay the BCN relocation of office staff It also secures that unions are focused on discussing new terms and conditions, vs. securing higher severance compensation for staff we won’t need in the future dimension beginning Winter 2010 In general terms, same tactics can be applied to other stakeholders, ie. Suppliers Provides room for us to handle the media and distance the debate on the ERE, vs. on ‘securing a future together with unions and stakeholders, by adapting the business to the new market realities’

5. Route map