Airline Group acquires Air Europe for €1 billion
The International Airlines Group (IAG), yesterday, signed an agreement to purchase Spanish carrier, Air Europa, for €1 billion (N401 billion).
The deal was announced by the Group, Tuesday, and if the relevant approvals go ahead, this would be the group’s third Spanish airline behind Iberia and Vueling.
The merger and acquisition, again underscore the popular argument that no airline can survive in isolation in the highly competitive air travel industry.
IAG was founded in 2011, by the merger of British Airways and Iberia. Since then, other airlines have joined or been founded by the Group, which now make up five large airlines. This will become six should everything go as planned with the acquisition of Air Europa.
The new deal will see one of Europe’s large aviation groups becoming slightly larger. One of IAG’s wholly-owned subsidiaries, Iberia, is set to acquire the airline.
Initially, following completion of the deal, Air Europa will retain its branding. While the airline is being purchased by Iberia, it will maintain a standalone profit centre. The purchase of Air Europa will allow IAG to focus on its Spanish operations, particularly those in Madrid.
Air Europa, a member of the SkyTeam alliance, was founded 33 years ago in 1986. The airline is owned by Globalia and operates its main hub in Madrid alongside Iberia. According to Airfleets.net, Air Europa operates 46 aircraft. This consists of aircraft ranging all the way from the ATR 72 all the way up to the Boeing 787.
Air Europa is currently a member of the SkyTeam alliance, while Iberia is a member of the Oneworld alliance. When Delta recently announced a partial acquisition of LATAM, the Oneworld alliance’s only South American carrier announced its withdrawal due to a conflict of interests.
As Air Europa has a strong network to South America, the acquisition of the airline could prove useful to more than just IAG.
IAG believes that the purchase of the airline will allow the group to transform Madrid into one of Europe’s large hub airports competing with London, Frankfurt, Amsterdam, and Paris.
Additionally, with Air Europa’s network of South American flights, the purchase will “unlock further network growth opportunities and re-establish IAG’s South Atlantic leadership”.
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