Iberia rubber-stamps buyout of Air Europa for half a billion euros

IBERIA has signed for the purchase of home-grown low-cost carrier Air Europa more than a year after the two companies reached a deal.

The final amount of the buyout is half a billion euros – double the end price of the operation and which is due to be paid in full in the year 2026.

IAG, the holding company which owns Spain's main national airline Iberia and also British Airways, had already agreed to the takeover, but the pandemic held up operations on what was described at the time as a move that would be 'ground-breaking' for the national tourism industry.

It came after the State industrial participations society (SEPI), a fund for bailing out key corporations affected by the Covid crisis, had planned to buy back Air Europa – a brand belonging to the holding company Globalia – for €475 million.

Two SEPI consultants were designated on December 23 in accordance with the buy-back terms, and the next step – still to be taken – was to nominate a joint executive director for SEPI and Air Europa in order to be able to proceed with the payout. 

Air Europa's bailout was the first operation funded by SEPI, which has a pot of €10 billion aimed and propping up companies which were already solvent before the pandemic and which are considered 'strategic' for the Spanish economy, but which have been in danger of collapse as a result of the Covid outbreak.

Iberia has since stepped in and agreed to purchase the airline, which may involve additional terms that could affect the existing agreement between SEPI and Air Europa.

Either way, Air Europa was still operating as at the end of 2020 and is set to continue to do so, although even with the IAG takeover, is expected to continue trading under the same brand name.

Iberia airlines mainly operates long-haul flights, in conjunction with other main national carriers, and is the world's principal connector from Europe and Asia to Latin America.

Air Europa has mostly focused on short-haul scheduled and charter flights between Spanish and other European destinations.