IAG Acquiring Air Europa For US$1.1 Billion

The International Airlines Group (IAG) acquiring Spanish airline Air Europa is a piece of significant airline news from Europe. IAG consists of British Airways, Air Lingus, and Iberia. IAG has scooped up another leading airline into its portfolio: Iberia’s main competitor Air Europa. The price tag was 1.1 billion U.S. Dollars (1 billion Euros).

That means IAG has purchased its largest counterweight against Spanish Competition.

The Consortium is expanding the list of airlines under its umbrella

Under the Spanish side, it has Level, Vueling, and Iberia. Having Air Europa on their side is supposed to expand their presence of destinations into Latin America. It will also increase their stronghold in the Ibero-Spanish market.

The departure of LATAM had left them without a partner in the Ibero-Spanish market. According to their press release, this acquisition was made between the consortium and the Spanish travel company Globalia Corporation.

Willy Walsh, Former CEO of British Airways and Current CEO of the International Airlines Group 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.”

Video: Air Europa

When is the acquisition expected to close?

The deal is expected to close during the second half of 2020, pending government approval.

I don’t know whether the Spanish government (since it is the third-largest airline after Iberia and Vueling) and for that matter, the European Union has the appetite to approve such a merger.

However, I believe that since the regulators will see it as a continental issue there wouldn’t be a problem as the Lufthansa Group has a similar type of structure between Central European Airlines. The Lufthansa Group is based out of Germany.

Turning Madrid-Barajas (MAD) into a Global Hub

If the Spanish and European governments let IAG have Air Europa within its umbrella, it won’t only be competing in the Ibero-Spanish market. It will also be competing with Lufthansa Group at the individual level of each airline.

IAG’s vision is to turn Madrid-Barajas into a “better” Heathrow Airport. Heathrow’s third runway is coming in the next few years. While that happens, the consortium wants to create a better connection and a better experience from Europe to Latin America.

IAG intends to use the underutilized Madrid airport to transform it into a European Hub. MAD would then join the ranks of Heathrow (London), Schiphol (Amsterdam), De Gaulle (Paris), and even a Frankfurt (Germany).

What do you think?

You can expect a second part regarding this article soon. I will be talking about what is going to happen next in regard to alliances, airline operations, and even code-sharing.

Stay tuned…

What do you think about IAG acquiring Air Europa? You can leave your comments here.


Featured Image: Air Europa

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