International Airlines Group (IAG) has agreed with Globalia to acquire the remaining 80% of the share capital of Air Europa for 400 million euros, as reported by the group to the Comisión Nacional del Mercado de Valores (CNMV).
This way, the airline group, owner of Iberia, takes 100% of the airline owned by the Hidalgo family for a total of 500 million euros, after the conversion of an unsecured loan of 100 million euros for seven years to Globalia into a 20% stake in the capital of Air Europa on 16 August.
IAG has detailed that the first 200 million euros will be paid upon receipt of approval from the competition authorities, 100 million euros in IAG ordinary shares and 100 million euros in cash. The second and third year after the date of approval of the transaction will be paid a further EUR 100 million each. The deal is subject to regulatory and other approvals, which could take around 18 months.
IAG’s board believes the acquisition remains “strategically important” to IAG’s future and positions the Group to benefit from growth opportunities in the Latin American and Caribbean market, as well as increasing connectivity to Asia.
Among the benefits of the acquisition are that it transforms IAG’s Madrid hub to compete with Europe’s largest hubs, enhances IAG’s position in the “highly attractive” market from Europe to Latin America and the Caribbean and allows the airline to open routes to new destinations in Asia.
It also considers that it provides “significant” benefits for customers by offering more network opportunities and providing access to IAG’s Avios loyalty scheme, as well as offering significant synergies, in line with those obtained in previous acquisitions, to be achieved between 2026 and 2028, assuming the transaction closes in around 18 months. In this respect, IAG recalls that it has a strong track record of maximising synergies from previous acquisitions.
Upon completion of the transaction, the Air Europa brand will remain under the management of Iberia. The airline group highlights the formula in which the transaction will be paid for on a deferred payment basis until approval of the transaction and one to two years thereafter, and believes that it will have an expected limited impact on IAG’s financial leverage ratio.
Luis Gallego, CEO of IAG, believes the deal 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”.
The acquisition will provide IAG with the opportunity to create value in three key areas, including the integration of Air Europa into Iberia’s existing hub structure in Madrid, the creation of commercial links between Air Europa and other IAG operating companies,
as well as the inclusion in IAG’s joint businesses and the fact that Air Europa will benefit from the common services of IAG Loyalty and IAG Cargo and from IAG’s technology and procurement services.
