International Airline Group (IAG), the parent company of British Airways, Aer Lingus and Iberia, has confirmed its intention to acquire the remaining 80% of shares in Spain’s Globalia offshoot, Air Europa.
Having agreed in March 2022 to grant Air Europa a €100 million loan that was convertible into a 20% stake, this latest move sees the culmination of a deal that began back in 2019. It had been IAG’s intention to pay €1 billion for Air Europa back then in order to build a major hub in Madrid, but then the COVID-19 pandemic disrupted the airline industry and concerns over antitrust regulations saw the deal side-lined. With Air Europa having been hit particularly hard by the pandemic, both companies subsequently agreed to cut the sale price in half, though until IAG provided the €100 million in March 2022, negotiations had all but come to a standstill.
It is understood that the first €200 million will be paid once the deal gets the go-ahead from antitrust authorities. Another €100 million will be paid in IAG shares while the final €100 million will be paid in cash. With the acquisition of Air Europa, which will keep its branding and be managed by Iberia, IAG is looking to improve its position in the Latin American market and expand into Asia, while allowing its Madrid hub to compete with other major airports in Europe. According to Globalia, the current Air Europa fleet consists of 50 aircraft comprising 787 Dreamliners and Boeing 737s, while a further 15 aircraft are on order. The deal is expected to conclude within the next 18 months. (£1.00 = €1.13 at time of publication).