Three years after the first agreement between Iberia and Air Europe, the process is finally on its way to completion. The parent company of the former national carrier, IAG, notified CNMV this afternoon of the acquisition of 100% of Balearic Airlines. Iberia already has 20% of the Hidalgo family company in its portfolio (for which it paid 100m) and will acquire the remaining 80% for a total amount of around €400m. That’s 500 million in all. Now, the merger is in the hands of the competition authorities who will have to recognize that this integration does not generate a monopoly on some air routes. The process can take up to 18 months.
As reported by IAG to CNMV, the first €200m will be paid upon receipt of approval from the competition authorities, divided into €100m in IAG common shares and €100m in cash (at fixed rate). Upon signing this agreement, 1.85 euros per address). In the second and third years after the date of approval of the operation, another 100 million euros will be paid to each. Upon completion of the deal, the Air Europa brand will continue to be managed by Iberia.
In the agreement between IAG and Globalia, it was also agreed that a sum of 50 million would be paid to the parent company of Air Europa in exchange for an exclusivity period until the operation is approved and an obligation not to litigate if the merger is not finalized. to be crowned.
The latter is something that could happen in the face of a possible rejection by the contest, as has already happened at the end of 2021, or also if Air Hidalgo’s general creditors, the ICO and SEPI, impose some compulsion on the process. Something that, in principle, has not been foreseen since last year they have already given the go-ahead to exchange the IAG 100 million participation loan for 20% of Air Europa. Indeed, the state’s 475 million bailout of the airline in 2020 was bound to close this merger first announced in 2019.
Overall, the parent company in Iberia is celebrating the closing of a purchase that at times seemed doomed. This agreement will allow the Madrid hub to compete on an equal footing with other European hubs and strengthen its position in the South Atlantic. Madrid is the main gateway between Latin America and Europe and there are opportunities to expand its network, providing significant benefits for our customers, employees and shareholders,” said IAG CEO Luis Gallego.
Gallego, who served as CEO of Iberia at the time of signing the first agreement with Air Europa three years ago, emphasized that the operation “depicts great potential in obtaining very important synergies and benefits for our customers by increasing opportunities for choice, frequencies, destinations and direct connections where there are currently none.” And integrate it into the loyalty program ».
assumption of debt
The merger also expects IAG to assume Air Europa’s debt which at the end of 2021 was close to €900m. The money which includes $475m from a SEPI bailout and $140m lent by an ICO. The former is supposed to be in 2026, while the loan secured by the ICO last year was renegotiated for settlement in 2028.
Despite this heavy backpack, for Iberia the purchase continues to have strategic meaning, not only for the company, but also for the recovery of tourism and the Spanish economy. “So that we can also move towards a new model of quality tourism, less dependent on our traditional markets in Europe, with more seasonal adjustment and with increased tourism spending and thus more stable job creation,” said Gallego.
Globalia is collapsing
However, for Globalia, selling its flagship car meant leaving its chassis in skeleton condition. At the end of last year, it had already lost its travel agency business (including Halcón Viajes) when it moved to Barceló, while looking for a buyer for the Be Live hotel chain.
As this paper has already reported, the ‘handling’ business stands as Globalia’s last stronghold once Air Europa’s integration into Iberia is confirmed. Regarding its future plans regarding entering into other possible business, the company is yet to disclose its intentions.
