IAG (International Airlines Group) has reached an agreement to acquire the Spanish airline Air Europa. The agreement was signed Globalia, owner of the airline. IAG will pay 400 million euros.
A takeover that will have taken time … because of Covid
In November 2019, Globalia wanted 1 billion euros to sell Air Europa. It was just months before the Covid crisis brought aviation to a standstill around the world and threw many airlines into serious trouble. Air Europa was one of them and the airline received a total of 610 million euros in loans from two different Spanish institutions.
IAG offered half the original price
IAG lowered its offer to 500 million euros in 2020. But this proposal was rejected by the Hildago family which owns Air Europa. The negotiations continued until 2021, but took a turn in August 2022 when IAG announced that it had taken an option to convert a previous loan of 100 million euros into a 20% stake in Air Europa. To acquire 80%, IAG will pay 400 million euros.
We have to wait for the European decision
The acquisition is subject to regulatory approval, which could take eighteen months. If the takeover is approved, Air Europa will be integrated into the structure of the Madrid hub. The Air Europa brand should be retained.
The Madrid hub wants to compete with other major European hubs
IAG CEO Luis Gallego confirms again in a press release: “This agreement will allow IAG’s Madrid hub to compete on equal footing with other European hubs and consolidate its position in the ‘South Atlantic. Madrid is the main gateway between Latin America and Europe and there are opportunities to expand its network, providing significant benefits to our customers, employees and shareholders. The acquisition should also bring IAG significant synergies and cost savings, but only between 2026 and 2028 if the transaction is approved no later than the second half of 2024.”
As a reminder, Qatar Airways owns more than 25% of IAG
Qatar Airways owns a large share of IAG, which means that this company owns part of Iberia in a roundabout way. A year ago, Qatar Airways owned 21.4% of IAG. However, in February the airline increased its stake to 25.1%, meaning it owns just over a quarter of the group.
Air France should firmly enter the battle
The Air France-KLM group will have to make the best offer to acquire TAP Air Portugal. Indeed, competition with Madrid will be strong for connections to South America. Lisbon can be a good solution for the French group.
As some aviation experts indicated, the merger between airlines in Europe will continue. There should be only 3 air groups on the continent for a while.
