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Airline group IAG, parent company of British Airways and Iberia, on Thursday announced the acquisition of Air Europa for 500 million euros ($530 29.9 million) from the Spanish company Globalia.
“The Board of IAG believes that the acquisition remains strategically important for the group and positions it to benefit from growth opportunities in the Latin America and Caribbean market, as well as to increase connectivity to Asia,” it said in a statement.
IAG announced last August it had taken a 20 percent stake in Air Europa after converting a loan.
It will acquire the remaining 80 percent for 400 million euros, the group said, adding that the agreement is “subject to regulatory and other approvals, which could take around 18 months”.
IAG announced in 2019 a proposed merger with Air Europa, at the time estimated at one billion euros.
The group, which also owns the Spanish low-cost airline Vueling, hopes to strengthen its links to the American continent and make Madrid a main European hub.
But the project was hampered by the Covid-19 pandemic, which led IAG to halve its initial offer, then by the reluctance of the European Commission, worried about a reduction in competition in the Spanish market.
These difficulties led IAG to announce in mid-December the termination of the 2019 purchase agreement.
The revised deal will “enable IAG’s Madrid hub to compete on an equal footing with other European hubs and consolidate its position in the South Atlantic” IAG chief executive Luis Gallego was quoted as saying in the statement.
“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,” he added.
A sum of 400 million euros would be paid in the form of 100 million euros in IAG shares and 100 million euros in cash up on closing the deal, followed by an additional 100 million euros payable in cash on both the first and second anniversary of the final deal, the statement said.
The Air Europa brand will be retained under the management of Iberia.
IAG, which also controls the Irish company Aer Lingus, is the third largest airline group in Europe behind Ryanair and Lufthansa.
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