Spanair is a struggling airline which its owners have been trying to sell and whose pilots had been threatening strike action.

In a report in aviation magazine Flight International, pilots allegedly accused management of failing to put together a solid business plan.

The airline, based in Palma, Mallorca, is 94 per cent owned by the Scandinavian airline SAS which helped set up Spanair 20 years ago.

But last year SAS put the airline up for sale - only to withdraw its bid two months ago after failing to attract investors.

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The credit crunch and oil prices didn't help, but investors were also deterred by heavy losses reported by Spanair in the first half of the year.

The second biggest airline in Spain, its bigger rival Iberia looked to buy and merge with Spanair - but withdrew in May, instead announcing in July it was in talks with British Airways with a view to a merger.

The decision by Iberia, and lack of other investment, left SAS with no choice but to look to ways to streamline operations at Spanair.

And according to Flight International, management had begun an initiative to reduce capacity by 25 per cent and lose 1,000 jobs.

Currently, Spanair has 327 daily flights (42 charter and 285 scheduled), a fleet comprising 63 aircraft and 3,524 employees.

But Spanish pilots union SEPLA says the company is wallowing in "organised chaos" and believes the management is failing to mitigate the "structural weakness" of Spanair, adds the report.

It claims that the new initiative is "vague", containing "only a plan for immediate cost-savings" with "nothing for the company's future". SEPLA adds that the pilots will take steps to arrange a lawful strike.

The union criticises Spanair's corporate structure, claims the carrier has no control over expenditure, and says aspects such as investment in the fleet have not materialised.

While owned by SAS, Spanair also co-operated with Lufthansa on 'codeshares,' a common industry practise whereby a flight operated by an airline is jointly marketed as a flight for one or more other airlines.

Lufthansa has such a system in place with Spanair on its Spanish routes from Munich and Frankfurt - today's crash flight was also a codeshare. Lufthansa flight LH2554 left Munich at 8.50am for Madrid, where passengers switched planes onto the Spanair flight.

However, a spokeswoman for SAS would not comment at this stage on how many passengers on the Spanair flight from Madrid orginated from Munich, if any.

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