Spanish airline Iberia finally completes the €500m takeover of Air Europa

Spanish airline Iberia reduces flights from Madrid to Tel Aviv

Spanish airline Iberia reduces flights from Madrid to Tel Aviv Credit: Markus Mainka / Shutterstock.com

The €500m takeover of Air Europa by Iberia airlines has finally been completed but is subject to approval from the competition authorities, as well as SEPI and ICO.

Spanish airline Iberia has today, Thursday, February 23, finally completed the takeover of Air Europa. The closure – confirmed by both companies – comes three years and three months after the purchase announcement was originally made.

The agreement involves the acquisition by IAG of the remaining 80 per cent of Air Europa. They had already paid €100 million in August for 20 per cent equity in the company. Today’s deal saw another €400 million paid, bringing the total sale price to €500 million.

This agreement is still subject to the approval of the competition authorities, as well as SEPI and ICO. Likewise, it establishes compensation of €50 million as a breakup fee in the event that the acquisition did not materialise. Until the aforementioned approval is obtained, both companies will continue to compete with each other.

When the approval of the competition authorities is received, the first payment of €200 million will be made. It will consist of €100 million in cash and €100 million in IAG shares (at the price set at the signing of this agreement), which will make Globalia a major shareholder of the IAG group.

Another two payments, of €100 million each, will be made on the first and second anniversaries, respectively, of the approval by the Competition.

The IAG group originally agreed to buy Air Europa for €1,000 million back in November 2019. This plan was thrown into turmoil by the arrival of the pandemic and subsequently halted the operation.

Most of the planes were grounded during the pandemic which resulted in serious damage being caused to the accounts of the airlines. Air Europa needed a  bailout from the Spanish government worth €475 million, along with a loan from the ICO worth another €140 million.

That forced Iberia to rethink the purchase in January of last year. As a result, the sale price was reduced to €500 million, to be paid in five years, as reported by elperiodico.com.

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Written by

Chris King

Originally from Wales, Chris spent years on the Costa del Sol before moving to the Algarve where he is a web reporter for The Euro Weekly News covering international and Spanish national news. Got a news story you want to share? Then get in touch at editorial@euroweeklynews.com

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