The IAG airline consortium, made up among others of Iberia and British Airways, granted this Thursday a loan of 100 million euros ($111) to Air Europa, which could be converted into a 20% stake in the Spanish airline.
International Airlines Group (“IAG”) and Globalia, owner of Air Europa, “have reached an agreement under which IAG will provide Globalia with an unsecured loan of 100 million euros over seven years,” the former said in a statement.
“Subject to the relevant regulatory approvals, IAG will have the option to convert the loan into a stake of up to 20% in the capital of Air Europa,” the statement said.
In exchange for the loan, IAG also ensures “a period of exclusivity of one year” for negotiations with Globalia. In addition, IAG will be able to match any third-party Air Europa offer over the next three years.
In 2019, IAG unveiled a plan to purchase Air Europa for 1 billion euros ($1,112 million), in order to strengthen its ties with the American continent and make Madrid one of the main European focal points.
But the coronavirus pandemic has put the project on the back burner and has led IAG to halve its initial offer, to which we must add the European Commission's concerns about a reduction of competition in the Spanish market.
The difficulties led IAG to announce in mid-December that it was waiving the 2019 purchase agreement, but that it would try a new approach.
IAG, which also owns Ireland Aer Lingus and the Spanish low-cost airline Vueling, is the third largest commercial passenger airline in Europe, after Ryanair and Lufthansa, while Air Europa is the third largest airline in Spain.
Air Europa connects Madrid with direct flights to Latin American cities such as Asunción, Montevideo, Caracas, Lima, Bogotá, Panama, Sao Paulo and Buenos Aires, among others.
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