International Airlines Groupowner of Iberia, reported Thursday that it agreed to pay 400 million euros (423.84 million dollars) to the Spanish Globalia for 80% of the airline Air Europe which he did not yet own.
IAG, which also owns British Airways, said in a statement that the transaction will allow it to improve its position in the Latin American market and expand in Asia, while the Madrid hub will be able to compete with other major European airports.
Air Europe, which will maintain its brand but will be managed by Iberia, owns 50 aircraft and has another 15 in its portfolio, according to the company. Its fleet is made up of Boeing 787 Dreamliners and Boeing 737s, Globalia reported in another statement.
IAG said the acquisition will allow it to achieve significant cost cuts that it expects to pay off between 2026 and 2028 if the deal closes in the next 18 months.
The first 200 million euros will be paid once the operation receives the approval of the antitrust authorities. Another 100 million euros will be paid in IAG shares and the remaining 100 million in cash.
Many of the airlines Traditional European banks, suffering from weak balance sheets, are finding it difficult to compete with their low-cost peers.
The long acquisition process began in 2019, when IAG announced that it had agreed to buy its smaller rival for €1 billion with the aim of building a large operations center in Madrid, but the coronavirus pandemic covid and antitrust concerns derailed the merger.
When the pandemic plunged the aviation sector into a crisis that particularly affected Air Europa, the shareholders of both companies agreed to reduce the price of the operation to 500 million euros.
The Spanish Government approved a rescue package of 475 million euros to Air Europe in November 2020, a portion of which could be converted into equity, meaning it has also been involved in talks since then.
Negotiations were virtually at a standstill until March 2022, when IAG agreed to grant Air Europa a €100 million loan convertible into a 20% stake.
Source: Reuters
Source: Gestion
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