Aer Lingus owner IAG finalises deal to buy Air Europa for €500m

IBERIA and Aer Lingus owner International Airlines Group (IAG) has finalised a deal to buy Air Europa for €500m.

This is a significant reduction on the original equity value of €1bn for Air Europa, which IAG had agreed to prior to the Covid-19 pandemic.

The global pandemic has resulted in a collapse in the number of people flying, placing considerable pressure on the airline industry.

Payment of the acquisition has been deferred until the sixth anniversary of the deal’s completion.

Aer Lingus owner IAG said it continues to expect the acquisition to generate “significant cost and revenue synergies”.

“Both Iberia and IAG are demonstrating their resilience to face the deepest crisis in aviation’s history,” said Luis Gallego, IAG’s chief executive.

“Being part of a large group is the best guarantee to overcome current market challenges which will also benefit

Air Europa once the transaction is completed.”

The purchase of Air Europa is expected to be earnings accretive in the first full year following completion.

Air Europa operates domestic and international flights on European and long-haul routes to Latin America, the United States of America, the Caribbean and North Africa.

The revised terms in the Amendment Agreement are conditional on the satisfactory negotiation between Iberia and Sociedad Estatal de Participaciones Industriales (SEPI) regarding the non-financial terms associated with the financial support provided by SEPI to Air Europa during 2020.

Iberia intends to begin discussions with SEPI shortly concerning these conditions, according to a statement from IAG.

If all conditions of the Amendment Agreement and the acquisition are satisfied, completion of the deal is expected to take place in the second half of this year.

The deal is still subject to approval by the European Commission.

Last week, former Airbnb global senior executive Aisling Hassell joined the board of Aer Lingus.

Ms Hassell, who’s based in Dublin, was Airbnb’s global vice president of customer support until last September.

Aer Lingus was acquired by IAG in 2015 for more than €1.3bn.

‘Being part of a large group is best way to overcome current market challenges’