✈️ Exclusive Benefits for Readers
Verified codes to save on your next trip.
IAG (Iberia) reached an agreement for the purchase of the airline Air Europa, Part of the group Globalia for $500 millions, but subject to the approval of the Competition authorities. Photo from Iñaki Calvopiña
The purchase of Iberia a Air Europa is an operation that was announced in November 2019, but which has been affected by the pandemic COVID-19. in november 2020, it was announced that the deal had been reduced from 1.000 million euros to 500 millions euros due to the effects of the pandemic in the aviation sector.
A million dollar deal, pending authorization
The acquisition of Air Europa by Iberia is a strategy to strengthen the position of both airlines in the European and Latin American markets, as well as to compete with other giants in the sector such as Ryanair, EasyJet and Lufthansa.
Once the acquisition is complete, It is expected that Air Europa integrate fully into the group of Iberia, which will allow the company to offer more destinations, frequencies to its customers and improve its position in the Latin American markets.
Nevertheless, the acquisition of Air Europa is not without criticism. Some industry analysts point out that the purchase comes at a time when the aviation industry is experiencing an unprecedented crisis due to the COVID-19 pandemic., which could jeopardize the viability of the operation.
The new agreement announced involves the acquisition by IAG of the 80 remaining percent of Air Europa for 400 millions of euros. IAG had paid in its day 100 millions for him 20 percent of Air Europa, so that the total of the operation amounts to 500 million euros for the equity of the company.
When the approval of the competition bodies is received, the first payment will be made 200 millions of euros, 100 millions in cash and 100 million in shares of IAG (at the price set at the signing of this agreement), which will make Globalia an important shareholder of the IAG group.
the other two payments, from 100 million euros each, will be held on the first and second anniversary, respectively, of approval by Competition.
The agreement is subject to the approval of the Competition authorities, as well as SEPI and ICO. in addition, set compensation for 50 million euros as a breakup fee in the event that the acquisition could not materialize. Until the aforementioned approval is obtained, both companies will continue to compete as to date.
Does the user win?
The biggest concern for travelers is that if this purchase is approved, what will happen to the flights? In perspective, many countries in Latin America would have a single dominant operator on flights to Spain, which in practice could represent an increase in prices and a decrease in supply, affecting the consumer.
Thus, It is important to wait for the decision of the different control entities, that even, They can put conditions or limitations on the purchase to ensure the free market and healthy competition in favor of travelers.
✈️ Exclusive Benefits for Readers
Search here for hotels ALL over the world at the best price.
Let's see: who buys is the corporate group IAG, where Iberia is one more line , as well as British, and so will be Air Europa. It is not Iberia who is paying for this purchase, you are an IAG.
Totally agree, but at the time that IAG mentions: "Integration of Air Europa into the current Iberia hub structure in Madrid" we know that the purchase is to boost Iberia, that's why the owner friend, nothing more.