IAG Group, owner of Iberia and British Airways, acquires Air Europa

Grupo Globalia has received 1 billion euros for the Spanish airline that will be part of a large hub in Madrid
Air Europa will join IAG Group (AE)

The IAG Group, which has several airlines, including British Airways and Iberia, announced on Monday the acquisition of Air Europa, which today belongs to the Spanish group Globalia. The transaction price is 1 billion euros ($ 1.12 billion).

According to the IAG, the goal is to make Madrid’s hub one of the largest in Europe, rivaling Heathrow (London), Amsterdam, Frankfurt and Charles de Gaulle (Paris).

The company also intends to strengthen its presence in Latin America and the Caribbean, where Iberia and Air Europa operate strongly. The deal is expected to be completed in the second half of 2020.

“Acquiring Air Europe 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 Willian Walsh, group CEO.

“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, “said Javier Hidalgo, CEO of Globalia.

Air Europa today has 69 destinations, much of it in Latin America, where it offers flights to cities where Iberia does not operate. In 2018, the airline had revenues of 2.1 billion euros and an operating profit of 100 million euros. Its fleet of 66 aircraft, which includes models like the Boeing 787 and Airbus A330, carried 11.8 million passengers last year.

IAG wants to make Madrid hub one of Europe’s largest (Bene Riobó)

An eye on South America

One of the main markets in which the IAG group intends to invest is South America, especially Brazil. Globalia has even opened a subsidiary in the country with the intention of operating on local flights, but it is not known if this plan will go ahead with the change of ownership.

Currently, the Air France-KLM group is one of the fastest growing in the region, creating a hub in northeastern Brazil. The IAG reaffirmed that synergy with the other companies in the group should benefit customers, but it is a fact that the goal is also to reduce costs that should bring the first benefits in 2025, according to a statement released on Monday.

Creator of the website that started in 1996 as a magazine. He also writes on Brazilian websites AUTOO, MOTOO and MetrôCPTM.

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