The Spanish airline and its UK parent company IAG have approved in a meeting with their top management the acquisition of Air Europa for 500 million euros. With the provison that SEPI facilitates the final agreement. This figure is half of what was agreed a year ago when the operation began to be forged. However, the impact of the pandemic has been insurmountable, with a collapse of about 90% in air traffic at a global level. So the two parties have been forced to renegotiate the initial conditions. The payment will not be made until 2026. That is when the 475 million euros bailout granted to Globalia , the group that owns Air Europa, should have been returned.
According to El Confidencial, the operation is pending an agreement from the fund for the rescue of the strategic companies affected by the pandemic, managed by state-owned industrial holding SEPI. It needs to renounce the appointment of the two directors it is entitled to have because of the above- mentioned loan. This condition is due to Iberia’s need for the state-owned institution not block the massive layoffs which are necessary for making the project viable.
According to the newspaper ABC, despite the health crisis the integration of Air Europa with Iberia “would allow the creation of an air giant responsible for 1 in 5 passengers in Spain, or 21% of air traffic.” However, the newspaper El País assures that “Air Europa would take more than 20 years to return public aid at the pace of its latest profits.” “The airline earned 27.7 million euros in 2019 but admits that the pandemic will have unforeseeable negative consequences.”
It is expected the agreement between the three parties – Iberia, Air Europa and Sepi – will be reached in the next two weeks to make the integration official before year-end.