International Airlines Group (IAG), owner of Iberia, bought the airline Air Europa, owned by Globalia, for 500 million euros. Initially, on August 16, 2022, IAG had paid 100 million for 20% of Air Europa. This time, Iberia acquired the remaining 80% of the airline’s issued share capital for 400 million.
Once the national and European competition authorities give their approval, the first 200 million euros will be paid. 100 million will be in IAG ordinary shares and the other 100 million in cash. The other two payments, of 100 million euros each, will be made in the second and third year after the date of approval of the transaction.
According to El Paísthe deal is subject to the approval of the Competition authorities, as well as of SEPI and ICO. In the event that the acquisition of Iberia could not be completed within the aforementioned 18 months, the agreement provides for a compensation of 50 Million Euros as a fine.
In addition, IAG retains the right to exit together with Globalia in the event that it sells Air Europa to a third party after the termination of the agreement. Until the go-ahead is obtained, Iberia and Air Europa will continue to compete. Thereafter, the Air Europa brand will be managed by Iberia.
“This agreement will allow IAG’s Madrid hub to compete on a level playing field 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,” explained Luis Gallego, CEO of IAG.
Jesús Nuño de La Rosa, CEO of Air Europa Holding, said in a statement that the agreement reached with IAG “endorses the success of the plan carried out to consolidate Air Europa as an international reference after the pandemic, demonstrating its viability and good work, before and after the biggest crisis in the aviation sector”.
The rescue of Air Europa
In 2020, Air Europa needed a rescue from the Spanish government due to the COVID-19 pandemic. The Sociedad Estatal de Participaciones Industriales (SEPI) approved at that time an injection of 475 Million Euros to give oxygen to the company. Also the ICO granted to the Globalia group a loan for 140 Million Euros.
The company owned by the Hidalgo family recorded record losses in 2020, amounting to 427.7 Million Euros. A year earlier, it had obtained profits of 27.7 million. But the aid granted by the State did not last long. El País reported that the company ate the 475 million euros granted by the government in one year.
The collapse of Air Europa also affected the business with IAG. The 500 million euros agreed are barely half of what was announced in 2019, when the company showed interest in finally acquiring the airline and proposed to pay one billion euros for it.
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