IAG to acquire Air Europa in a new $1.1 billion deal

Posted on November 4, 2019 by in Iberia, Low Cost Airlines, Travel Deals, Travel News

International Airlines Group or IAG is the parent of British Airways, Iberia, Aer Lingus, Vueling, and Level. Now, IAG has signed an agreement to purchase Spanish carrier Air Europa.

IAG to purchase Air Europa

International Airlines Group has announced an agreement to buy Madrid-based airline Air Europa for $1.1 billion. After Iberia and Vueling that are already part of IAG, Air Europa is the third largest Spanish Airline. Air Europa will be acquired by IAG subsidiary Iberia. This will help IAG to create a mega-hub in Madrid to compete with other major hubs in Europe.

“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,” said chief executive Willie Walsh

Air Europa generated around $2.3 billion of revenue. That resulted in an operating profit of $111 million. Air Europa currently operates a fleet of 66 aircraft, with plans to expand. Air Europa mostly operates from its hub in Madrid-Barajas, with 69 destinations connecting Spain and the Americas.

What IAG had to say about the purchase

The purchase is expected to be completed in the second half of 2020, that is of course if IAG gets the approvals needed. The group even said that it had agreed to pay Air Europa a break fee of €40 million in the event that they fail in acquiring the necessary approvals. The purchase will only go through if the European Commission gives the approval for the merge.

IAG said that it anticipated ‘opportunities to unlock value’ in three areas:

  • Integrating Air Europa into the existing Iberia hub structure at Madrid
  • Creating commercial links between Air Europa and other IAG operating companies, in addition to inclusion into IAG’s joint businesses
  • Integrating Air Europa onto the IAG platform of common services

The airline launched in 1986 and became a full member of the Skyteam alliance in 2010. If the purchase comes through it is most likely that Air Europa will leave SkyTeam. All IAG members are part of the Oneworld alliance. However, there is still no confirmation of this.

About the author: Mila Kostic is a native of Belgrade, Serbia. After majoring in sociology at the Belgrade University she has been working as tutor and coach. Prior to taking on her role at Mighty Travels, she wrote for a video games, fitness, and health lifestyle website. After starting her work with the Mighty Travels team she discovered her passion for travel and travel writing. Now, she is focused on bringing you the newest travel news. In her portfolio here at Mighty Travels, you can find articles on Airline news, hottest credit card deals, tips and tricks on earning miles and much more. You can reach her at [email protected]

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