British Airways and Iberia owner to buy Air Europa for €1 billion

With the acquisition, IAG aims to transform the airline’s Madrid hub “into a true rival to Europe’s four largest hubs”

There will soon be some dramatic changes in the skies over Europe as International Airlines Group (IAG) has announced another huge acquisition. The group — that already owns UK’s flag carrier British Airways and Iberia — will purchase Madrid-based airline Air Europa for €1 billion.

Spain’s third-largest airline should belong to IAG from the second half of 2020 — Vytautas Kielaitis / Shutterstock British Airways and Iberia owner to buy Air Europa for €1 billion
Spain’s third-largest airline should belong to IAG from the second half of 2020 — Vytautas Kielaitis / Shutterstock
 

The third-largest airline in Spain will now be controlled by IAG’s subsidiary Iberia with the group stating that the brand “will initially be retained and the company will remain as a standalone profit center within Iberia run by Iberia CEO Luis Gallego”.

With the acquisition, IAG aims to transform Air Europa’s Madrid hub “into a true rival to Europe’s four largest hubs: Amsterdam, Frankfurt, London Heathrow and Paris Charles De Gaulle”, and would re-establish the group “as a leader in the highly attractive Europe to Latin America and Caribbean market”.

“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,” said IAG chief executive, Willie Walsh. 

IAG wants Madrid to become a rival hub to four major hubs in Europe — Shutterstock British Airways and Iberia owner to buy Air Europa for €1 billion
IAG wants Madrid to become a rival hub to four major hubs in Europe — Shutterstock
 

Air Europa launched in 1986 and has become Spain’s third-largest airline after Iberia and Vueling that both belong to IAG. The airline operates 69 domestic and international routes 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.

IAG expects the highly anticipated transaction to complete in the second half of 2020. The group also stated that there might be “opportunities to unlock value” in various areas. IAG wants to integrate Air Europa into the existing Iberia hub structure at Madrid. Furthermore, the new ownership could create commercial links between Air Europa and other IAG operating companies.