IAG, the British Airways and Iberia group, ends up buying all of Air Europa

This is the culmination of a long story. The IAG group, parent company of British Airways and Spanish Iberia, announced Thursday in a statement the acquisition of the entire capital of Air Europa for a total of 500 million euros to the Spanish company Globalia, concluding a merger initiated nearly four years ago.

IAG had already announced last August the conversion into shares of 20% of a 100 million euro loan to Globalia. It is now acquiring the remaining 80% for 400 million euros, the group said, adding that the sale "is subject to regulatory and other approvals, which could take about 18 months".

The American market in focus

The premises of this transaction date back to November 2019. At the time, IAG announced a proposed merger with Air Europa, at the time valued at €1 billion. The British group, which also owns the Spanish low-cost airline Vueling, hoped to strengthen its links to the American continent and make Madrid one of the main European hubs.

But the project had been damaged by the Covid-19 pandemic, which led IAG to halve its initial offer, and then by the reluctance of the European Commission, concerned about a reduction in competition on the Spanish market.

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These difficulties had led IAG to announce in mid-December 2021 the termination of the 2019 purchase agreement. The British group had, however, said it wanted to find a new form of rapprochement.

Brand retention

The transaction "will allow IAG's Madrid hub to compete on an equal footing with other European hubs and consolidate its position in the South Atlantic," while "Madrid is the main gateway between Latin America and Europe," argued Luis Gallego, IAG's chief executive, quoted in the statement released on the eve of the presentation of the group's results for 2022.

In detail, the sum of 400 million euros will first be paid in the form of 100 million euros in common shares of IAG and 100 million euros in cash at the closing of the operation. The balance will be paid in two halves on the first and second anniversary. The Air Europa brand will be retained, under the management of Iberia.

Source : https://www.lesechos.fr/industrie-services/tourisme-transport/iag-le-groupe-de-british-airways-et-iberia-finit-par-racheter-lintegralite-dair-europa-1909593