International Consolidated Airlines Group (IAG) is to acquire Spanish airline Air Europa for €1 billion with completion expected to take place in H2 2020, following receipt of relevant approvals.

IAG and Globalia, announced definitive transaction agreements have been signed under which IAG’s subsidiary Iberia has agreed to acquire the entire issued share capital of Air Europa for €1 billion subject to a closing accounts adjustment.

The Board of IAG believes the transaction would increase the importance of its Madrid hub, “Transforming it into a true rival to Europe’s big four hubs: Amsterdam, Frankfurt, London Heathrow and Paris Charles De Gaulle.”

“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,” commented IAG chief executive Willie Walsh. “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.”

The Air Europa brand will initially be retained and the company will remain as a standalone profit centre within Iberia. IAG and Iberia management plan to integrate Air Europa into the existing Iberia hub structure at Madrid and onto the IAG platform of common services, as well as creating commercial links between Air Europa and IAG’s other operating companies.

“This is of strategic importance for the Madrid hub, which in recent years has lagged behind other European hubs,” commented Luis Gallego, chief executive of Iberia, “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 operates scheduled domestic and international flights to 69 destinations, including European and long-haul routes to Latin America, the USA, the Caribbean and North Africa. In 2018 the airline generated revenue of €2.1 billion and an operating profit of €100 million.

The airline carried 11.8 million passengers in 2018, ending the year with a fleet of 66 aircraft.

Javier Hidalgo, chief executive of Globalia, commented: “We are convinced that the incorporation of Air Europa to a group such as IAG, who over all these years has demonstrated its support to the development of airlines within the group and the Madrid hub, will be a success”.

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