The Spanish government said Tuesday it would offer a 475-million-euro ($553-million) lifeline to Air Europa to help see the airline through the coronavirus pandemic.
The aid is to come from a 10-billion-euro fund set up in August to help strategic companies weather the crisis, government spokeswoman Maria Jesus Montero said after the weekly cabinet meeting.
"Air Europa provides an essential service to guarantee connectivity in Spain," she said.
The firm, which serves long-haul routes to the Americas and the Caribbean, is the second-most popular Spanish carrier for international destinations, Montero said.
Air Europa is the first major Spanish company to tap the government fund, which was created to help companies in areas such as health, communications and infrastructure.
IAG, the parent of British Airways and Spain's Iberia, agreed in November 2019 to buy Air Europa for one billion euros. The operation has still not been completed.
Governments around the world have scrambled to rescue carriers that had to park planes and cut jobs as the epidemic put the brakes on travel.
The airline sector has been one of the hardest-hit, with the International Air Transport Association (IATA) predicting that full-year passenger traffic will plunge by 66 percent.
The aid package for Air Europa is to consist of a regular loan of 235 million euros and an equity-backed loan of 240 million euros.
Founded in 1986, Air Europa was the first private airline to operate scheduled domestic flights within Spain, breaking flag carrier Iberia's monopoly.