The airline consortium IAG, made up of Iberia and British Airways, among others, granted this Thursday a loan of 100 million euros ($111 dollars) to Air Europa, which could be converted into a 20% stake in the Spanish airline.
International Airlines Group (“IAG”) and Globalia, which owns Air Europa, “have reached an agreement under which IAG will grant Globalia an unsecured loan of 100 million euros over seven years,” the former said in a statement.
“Subject to relevant regulatory approvals, IAG will have the option of converting the loan into a stake of up to 20% in Air Europa's capital,” the statement states.
In exchange for the loan, IAG also ensures “a one-year period of exclusivity” for negotiations with Globalia. In addition, IAG will be able to match any third-party offer by Air Europa over the next three years.
In 2019, IAG unveiled a project to purchase Air Europa for 1 billion euros (1,112 million dollars), in order to strengthen its links with the American continent and make Madrid one of the main European focal points.
But the coronavirus pandemic put the project on hold and led IAG to halve its initial offer, to which we must add the European Commission's concerns about a reduction in competition in the Spanish market.
The difficulties led IAG to announce in mid-December that it was waiving the 2019 purchase agreement, but that it would try a new approach.
IAG, which also owns Ireland's Aer Lingus and Spanish low-cost airline Vueling, is the third largest commercial passenger airline in Europe, after Ryanair and Lufthansa, while Air Europa is the third largest airline in Spain.
Air Europa connects Madrid with direct flights to Latin American cities such as Asunción, Montevideo, Caracas, Lima, Bogotá, Panama, Sao Paulo and Buenos Aires, among others.
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