IAG has ambitions on transforming Madrid into a hub destination to rival Frankfurt and Amsterdam with deal set to be inked in second half of 2020

British Airways’ parent company International Consolidated Airlines Group (IAG) is to buy Air Europa in a €1 billion deal.

IAG also the owner of Spanish airline Iberia and has ambitions on transforming IAG’s Madrid hub into a true rival to Europe’s four largest hubs: Amsterdam, Frankfurt, London Heathrow and Paris Charles De Gaulle. IAG is also aiming to re-establish itself as a leader in the Europe to Latin America and Caribbean market.

Air Europa is owned by Spanish leisure group Globalia and is one of Spain’s leading airlines. It operates scheduled domestic and international flights to 69 destinations, including European and long-haul routes to Latin America, the United States of America, the Caribbean and North Africa. In 2018, Air Europa generated revenue of €2.1 billion and an operating profit of €100 million. It carried 11.8 million passengers in 2018 and ended the year with a fleet of 66 aircraft.

Air Europa brand to be initially retained

Completion of the deal is expected to take place in the second half of 2020 following completion of any necessary approvals. The Air Europa brand will initially be retained and the company will remain as a standalone profit centre within Iberia run by Iberia CEO Luis Gallego. IAG and Iberia anticipate opportunities to add value through the acquisition by integrating Air Europa into the existing Iberia hub structure at Madrid and creating commercial links between Air Europa and other IAG operating companies.

Deal will help IAG achieve “South Atlantic leadership”

Willie Walsh, Chief Executive of IAG, 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.”

Javier Hidalgo, Chief Executive of Globalia, added: “For Globalia, the incorporation of Air Europa to IAG implies the strengthening of the company’s present and future that will maintain the path followed by Air Europa in the last years. We are convinced that the incorporation of Air Europa to a group such as IAG, who over all these years has demonstrated its support to the development of airlines within the group and the Madrid hub, will be a success.”

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