Breaking: IAG To Buy Air Europa For €1bn

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.

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!

12
Leave a Reply

3 Comment threads
9 Thread replies
0 Followers
 
Most reacted comment
Hottest comment thread
9 Comment authors
newest oldest most voted
Phil

Looks like Delta is copping revenge this week. Lufthansa potentially bailing out Alitalia and Air Europa being bought out by IAG making it 2 members potentially already leaving Skyteam on top of China Southerns departure.

Peter

I can’t imagine that the EU competition authorities will allow this, as it effectively places the entirety of Spanish aviation in IAG’s hands, and removes the last bit of competition left (between Iberia and Air Europa).

Oliver Ohlsson

i think this also

Phil

Good point but don’t the Ultra Low Cost carriers like easyjet and Ryanair already compete with the IAG group within Spain? Also the EU did approve a merger between Aegan and Olympic a few years back which made them the only carrier in Greece apart from Low Cost carriers.

Transtraxman

I agree with Peter. The European Competition Authorities surely cannot let this go through. Taking over Air Europa eliminates competition from Europe to South America, and is the only domestic competition for Iberia. This might be beneficial for an IAG shareholder but not for passengers.
Obviously this is Willy Walsh´s big splash before he throws in the towel. I thought he had a a broader view of the picture, obviously not, so I am very disappointed.
IAG´s weaknesses lie elsewhere and other airlines should be targets, such as Norwegian (or SAS) but not exclusively so.

Joanna Bailey

This was my initial take on the situation. I think there will be some serious scrutiny. Be interesting to see if it gets passed – if it does it’s bad news for passengers.

Claudio

I totally agree with you. this will destroy the competition on south america routes,
Moreover we’ve seen what BA did to IB: annihilation

Peter

It seems that Ryanair are also going to lodge a “complaint” with EU antitrust authorities:

https://www.reuters.com/article/us-air-europa-m-a-ryanair-hldgs/ryanair-to-seek-divestments-as-part-of-iags-air-europa-purchase-idUSKBN1XE10Y

Lucas Siu

Then why EU allowed IAG to buy BMI, creating monopoly in UK?

Peter

Easyjet are a huge UK airline, and they don’t fall under IAG. So there’s still competition in the UK.
The same applies to Virgin.

Phixer

Iberia and Air Europa have had a close working relationship for many years, going back to their lease of B757s.
I took delivery of Air Europa’s first aircraft, a B737-300, in Seattle on behalf of ‎International Leisure Group [Air Europe]. They were operating a couple of aircraft before that on short-term lease from GPA.

javiskii

I certainly hope not, Air Europa has a much better service than any IAG airline, and I wouldn’t like it to go down the “not quite low cost-not quite flagship” state that Iberia and BA are in right now