Madrid (EFE).- The holding International Airlines Group (IAG), to which Iberia, British Airways, Vueling, Aer Lingus and Level belong, will buy 80% of the Globalia airline, Air Europa, for 400 million euros, with which becomes the sole shareholder and closes an operation that had been open for more than three years.
Last August IAG had converted a loan of 100 million into the capital of the Globalia airline, with which it had already taken over 20% of Air Europa.
Thus, the total amount of the transaction will amount to 500 million, the same amount that both groups had agreed to more than a year ago, after lowering it from the 1,000 million that they had agreed on in November 2019.
The agreement is subject to “regulatory approvals” that could take 18 months, according to what IAG has communicated to the CNMV.
IAG will pay the first 200 million when it receives the approval of the Competition authorities, of which 100 million will be paid in ordinary shares of IAG (based on the average reference price in the Spanish market in the five stock market sessions prior to the date of the agreement) and the other 100 million in cash.
The Air Europa brand will remain under the management of Iberia after this operation, which will have a “limited” impact on IAG’s financial leverage ratio.
Opportunity to reinforce the Madrid-Barajas hub
For IAG the purchase is “strategically important” and positions the Group to benefit from growth opportunities in the Latin American and Caribbean market and to increase connectivity with Asia.
The CEO of IAG, Luis Gallego, has explained in a communication to the CNMV that this purchase will contribute to reinforcing the “hub” (air traffic distribution center) to compete alongside the big Europeans (London-Heathrow, Amsterdam, Paris-Charles de Gaulle and Frankfurt).
The CEO of Air Europa, Jesús Nuño de la Rosa, explained in a note that the agreement with IAG endorses the success of the plan carried out to consolidate Air Europa as an international reference after the pandemic and demonstrates its viability.
The Spanish-British group considers that the operation implies “significant” benefits for customers since it offers more networking opportunities and gives access to the IAG Avios loyalty scheme.
Significant synergies between Iberia and Air Europa
The purchase offers significant synergies, which will be achieved between 2026 and 2028, if the closing of the operation is confirmed in 18 months. Among them, the creation of commercial links between Air Europa and other IAG operating companies, in addition to the inclusion in the joint businesses of the purchasing group.
Among them, the airline of the Hidalgo family (the owners until now) will benefit from the common services of IAG Loyalty and IAG Cargo and from IAG’s technology and purchasing services.
According to Globalia, this operation reinforces the value of the company and highlights the solidity of the project, and contributes to reinforcing the Madrid-Barajas hub.
Likewise, it will make it possible to consolidate the offer for air connectivity between Europe and Latin America and the Caribbean region, where Air Europa has a wide network of destinations and a solid presence.
Air Europa operates scheduled national and international flights to 36 destinations, including European routes and long-haul routes to Latin America and the Caribbean.
In 2019, before the pandemic, it carried 13.1 million passengers in 2019; in 2020 -in full covid- they dropped to 4.3 million; in 2021, 5 million and in 2022, 10 million travelers.