MIAMI – International Airlines Group (IAG) announced this morning that Air Europa (UX) will be purchased for half its previous price, as already revealed in December. The purchase will be concluded in the second half of the year.
With the crisis hitting the aviation industry hard, it suffered a significant impact in all aspects of its different businesses. Many jobs have been cut and passenger traffic is at an all-time low.
The New Terms of the Deal
The price for the acquisition of UX has halved, thus reaching €500m. The IAG group expects to complete the purchase in the second half of 2021, with the first announcement of the deal released in November 2019. To ensure that the deal goes through, approval of the European Union is needed.
Commenting on the new terms, IAG’s CEO, Luis Gallego, said, “Both Iberia and IAG are demonstrating their resilience to face the deepest crisis in aviation’s history. Being part of a large group is the best guarantee to overcome current market challenges which will also benefit Air Europa once the transaction is completed. I am pleased that we have reached agreement with Globalia to defer payment until well into the expected recovery in air travel following the end of the pandemic.”
Objective: to Solidify IAG’s Base in Madrid
The idea of the IAG group is to cement its position in Madrid, which is the home of one of the subsidiaries of IAG, IB. IAG also owns the Spanish low-cost carrier Vueling (VY). Furthermore, this purchase gives IAG the opportunity to expand its horizons in South America.
According to IAG, UX currently has a fleet of 52 operational aircraft. This is 16 fewer than when the deal was initially announced. All but one of these airplanes are on operating leases. As such, the airline’s lease liabilities were €1.6bn (US$1.9bn).
In 2019, UX had revenue of €2.1bn (US$2.5bn), operating profit of €71m (US$86m), and pre-tax profit of €42m (US$51m). Of course, the airline has been hit by the current situation, with passenger volume decreasing 70% in 2020.
Featured image: Air Europa Airbus A330-243 Skyteam livery. Photo: Alberto Cucini/Airways