Breaking: IAG To Buy Air Europa For €1bn

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IAG has signed an agreement to purchase Spanish carrier Air Europa. The deal, worth €1 billion, was announced by the airline group this morning. If the relevant approvals go ahead, this would be the group’s third Spanish airline behind Iberia and Vueling.

IAG, Air Europa, Purchase
Air Europa is to be acquired by IAG. Photo: Barcex via Wikimedia

The International Airlines Group was founded in 2011 by the merger of British Airways and Iberia. Since then, other airlines have joined or been founded by the group, which now make up five large airlines. This will become six should everything go as planned with the acquisition of Air Europa.

Details of the deal

The International Airlines Group announced the purchase this morning. It will see one of Europe’s large aviation groups becoming slightly larger. One of IAG’s wholly-owned subsidiaries, Iberia, is set to acquire the airline. The completed deal is worth a staggering €1 billion.

Initially, following completion of the deal, Air Europa will retain its branding. While the airline is being purchased by Iberia, it will maintain a standalone profit center. The purchase of Air Europa will allow IAG to focus on its Spanish operations, particularly those in Madrid.

IAG, Air Europa, Purchase
The existing member airlines of IAG. Photo: IAG Cargo

Commenting on the deal IAG’s CEO, Willie Walsh, said:

“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. 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.”

Who is Air Europa?

A member of the SkyTeam alliance, Air Europa was founded 33 years ago in 1986. The airline is owned by Globalia and operates its main hub in Madrid alongside Iberia. According to Airfleets.net, Air Europa operates 46 aircraft. This consists of aircraft ranging all the way from the ATR 72 all the way up to the Boeing 787.

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IAG, Air Europa, Purchase
Air Europa operates a range of aircraft including the Boeing 787. Photo: Boeing

Air Europa is currently a member of the SkyTeam alliance, while Iberia is a member of the oneworld alliance. When Delta recently announced a partial acquisition of LATAM, the oneworld alliance’s only South American carrier announced its withdrawal due to a conflict of interests. As Air Europa has a strong network to South America, the acquisition of the airline could prove useful to more than just IAG.

IAG believes that the purchase of the airline will allow the group to transform Madrid into one of Europe’s large hub airports competing with London, Frankfurt, Amsterdam, and Paris.  Additionally, with Air Europa’s network of South American flights, the purchase will “Unlock further network growth opportunities and re-establish IAG’s South Atlantic leadership”.

What do you make of IAG’s acquisition of Air Europa? Let us know your thoughts in the comments!

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