The operation reinforces the position of Iberia owner IAG on the Europe-LatAm routes, where it will have a 26% share (vs 19% current). One of the main competitors of IAG in these routes disappears, since Air Europa was the sixth operator Europe-LatAm, and the main one in the hub of Madrid.
IAG Air Europa
BOfAML | IAG has agreed to acquire Air Europa, a value carrier, for €1bn as it seeks to increase its market share in the South Atlantic market and turn Madrid into Europe’s next hub airport. The acquisition is in cash and will be funded by external debt increasing IAG’s net debt / EBITDA by 0.3x (from 1.2x at 3Q19). This raises questions on the potential cash return to shareholders.