IAG has closed the agreement with Globalia for the acquisition of the remaining 80% of the share capital of Air Europa for 400 million euros. Thus, an operation that was stagnant for three years is closed.
The first €200 million will be paid upon receipt of approval from the Competition authorities, €100 million in IAG ordinary shares and €100 million in cash.
The second and third year after the date of approval of the operation, another 100 million euros will be paid each. The deal is subject to regulatory and other approvals, which could take around 18 months.
On August 16, 2022, IAG made effective the Conversion of a seven-year, €100 million unsecured loan to Globalia for a 20% stake in the capital of Air Europa. Therefore, the total amount of the operation amounts to 500 million.
The Iberia parent company has highlighted in a statement announcing the operation that the acquisition of Air Europa “continues to be strategically important for the future of IAG and positions the group to benefit from the opportunities of growth in the Latin American and Caribbean market, as well as increasing connectivity with Asia”.
In this sense, IAG emphasizes that with the purchase it transforms the “hub” of IAG in Madrid so that it can compete with the largest “hubs” in Europe and provides significant benefits for customers by offering “more network opportunities and providing access to the scheme IAG Avios loyalty card.
IAG considers that all these synergies will materialize between the years 2026 and 2028, assuming that the closing of the operation occurs in around 18 months.
When the operation is completed, the Air Europa brand will remain under the management of Iberia.
“This agreement will allow IAG’s Madrid hub to compete on equal terms 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,” he said. Luis GallegoCEO of IAG in the statement sent by the air transport giant.
Air Europa operates scheduled national and international flights to 36 destinations, including European routes and long-haul routes to Latin America and the Caribbean. It transported 13.1 million passengers in 2019, 4.3 million in 2020, five million in 2021 and 10 million in 2022. Air Europa has an operating fleet of 50 aircraft and 15 aircraft on order through aircraft lessors. All aircraft are under operating lease, except for one Boeing 737 under finance lease.
In 2021, Air Europa reported revenue of €897 million, a loss from operations of €287 million and a pre-tax loss of €330 million.
Gross assets at the end of 2021 were €928 million and net debt €574 million.