Industry IAG to acquire Air Europa for €1 billion

International Consolidated Airlines Group (IAG) has released, that definitive transaction agreements between the group and Air Europa have been signed.

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IAG subsidiary IB OPCO Holding S.L. (Iberia) seeks to acquire the entire share capital of Air Europa for €1 billion. Ultimately, IAG seeks to transform the group´s hub at Madrid into a true rival to Europe´s other large airports in Amsterdam, Frankfurt, London-Heathrow and Paris Charles De Gaulle.

Willie Walsh, Chief Executive 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.”

Luis Gallego, Chief Executive 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.”

Air Europa is one of the largest airlines in Spain and is operating international and national services to a total of 69 destinations. The airline operates long-haul routes to Latin America, the United States, North Africa and the Caribbean. Last year, Air Europa carried 11.8 million passengers. A revenue of €2.1 billion was generated and an operating profit of €100 million.

Strategically, IAG hopes that the transaction increases the importance of the IAG hub and unlocks further growth opportunities to re-establish the group´s South Atlantic leadership. Furthermore, IAG seeks to record significant customer benefits through providing a more flexible schedule.

IAG said, that the Air Europa brand will be retained. The company will remain as standalone profit centre within Iberia. A major task will be for IAG to integrate Air Europa into the existing Iberia hub structure at Madrid and to integrate the airline onto the IAG platform of common services.

The whole acquisition will be funded by external debt. IAG announced, that it has agreed to pay Air Europa a break fee of €40 million in the event, that the transaction fails to receive the regulatory approvals.

Air Europa was initially founded in 1986 and currently operates with 65 aircraft, including nine ATR 72, 11 Airbus A330s, 20 Boeing 737s, 14 787s and 11 Embraer ERJ-195s. Subsidiary Air Europa Express flies with 19 aircraft.

Source © iairgroup.com

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