International Consolidated Airlines Group (IAG) and Globalia, the parent company of Air Europa, have confirmed that IAG’s wholly owned subsidiary, IB OPCO Holding S.L. (“Iberia”), has signed a deal to acquire the entire issued share capital of Air Europa (“Air Europa”) for €1 billion. Completion is expected to take place in H2 2020 following receipt of relevant approvals, but IAG has agreed to pay Air Europa a break fee of €40 million in the event that the transaction fails to receive the necessary regulatory approvals and either party elects to terminate the transaction agreement.
Air Europa performs scheduled domestic and international flights to 69 destinations, including European and long-haul routes to Latin America, the USA, the Caribbean and North Africa. In 2018, it generated revenue of €2.1 billion and an operating profit of €100 million. It carried 11.8 million passengers and ended the year with a fleet of 66 aircraft.
IAG said the Air Europa brand will initially be retained and the company will remain as a standalone profit centre within Iberia run by Iberia CEO Luis Gallego.
IAG expects the move to transform its Madrid hub into a true rival to Europe’s four largest hubs: Amsterdam, Frankfurt, London Heathrow and Paris Charles De Gaulle. It added that it would re-establish IAG as a leader in the highly attractive Europe to Latin America and Caribbean market.
Willie Walsh, CEO of IAG, commented: “Acquiring Air Europa would add a new competitive, cost effective airline to IAG, consolidating Madrid as a leading European hub and resulting in IAG achieving South Atlantic leadership, therefore generating additional financial value for our shareholders.
IAG has a strong track record of successful acquisitions, most recently with the acquisition of Aer Lingus in 2015 and we are convinced Air Europa presents a strong strategic fit for the group.”
Javier Hidalgo, CEO of Globalia, said: “For Globalia, the incorporation of Air Europa to IAG implies the strengthening of the company’s present and future that will maintain the path followed by Air Europa in the last years. We are convinced that the incorporation of Air Europa to a group such as IAG, who over all these years has demonstrated its support to the development of airlines within the group and the Madrid hub, will be a success.”
Luis Gallego, CEO of Iberia, added: “This is of strategic importance for the Madrid hub, which in recent years has lagged behind other European hubs. Following this agreement, Madrid will be able to compete with other European hubs on equal terms with a better position on Europe to Latin America routes and the possibility to become a gateway between Asia and Latin America.”