IAG expected to terminate €500m Air Europa takeover
By Jenni Reid
13:05, 15 December 2021
International Airlines Group (IAG) confirmed it is in advanced discussions to terminate an agreement to acquire Air Europa for €500m.
IAG’s Spanish subsidiary Iberia previously was set to acquire the entire share capital of Air Europa from Spain’s Globalia Group.
The agreement was signed in November 2019 with an equity value of €1 billion, but that was cut in half in January 2021, with payment to be deferred for six years due to the pandemic.
Spain’s transport ministry told news agency EFE it would now look at options to guarantee the continued activity of the airline due to its importance for the country’s aviation and tourism sectors.
IAG also owns British Airways, Aer Lingus and Spanish low-cost airline Vueling.
Deal challenges
IAG stock, which has dropped 13% this year amid ongoing international travel restrictions and Covid-19 concerns, was down 1.5% to 130.52p in mid-day trading Wednesday on the London Stock Exchange.
The group previously said the Air Europa acquisition would help it expand its Madrid hub, which it wants to rival hubs in Amsterdam, Frankfurt and Paris.
The deal already was under scrutiny from European and UK regulators over the potential damage to competition on domestic, short-haul and long-haul routes to and from Spain.
IAG CEO Luis Gallego told an online conference today the company was considering other options for a tie-up, according to a Reuters report.
Gallego reportedly said the company would not “continue with the current structure” but confirmed IAG is looking at new structures for the deal.
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