Apparently, I need to renegotiate some of the purchases I made last year, to get 50% off and 0% APR for 60+ months. ????
IAG moves forward with Air Europa acquisition, at a discount
In November 2019 it was announced that International Airlines Group (IAG) would acquire Air Europa in a €1 billion deal. IAG is the parent company of British Airways, Iberia, Aer Lingus, and Vueling, and this would essentially allow Iberia to acquire its biggest Spanish competitor.
The deal was initially expected to close in the second half of 2020. I’m sure IAG was happy about the delayed closing in retrospect, because the airline industry was turned upside down since then. Compare that to Delta purchasing a 20% stake in LATAM in 2019 — Delta paid more for that stake than the entire airline is worth now.
There has been talk about whether or not the deal would end up closing, because at a minimum IAG was looking to renegotiate the purchase.
Well, there’s now an update on that front — El Confidencial is reporting that the boards of IAG and Air Europa have come to an agreement for a modified acquisition price. With a deal that was allegedly privately agreed to yesterday, IAG will acquire Air Europa for a sum of €500 million, and payment will be deferred until 2026.
So IAG will acquire Air Europa for half off, and will only have to pay five years down the road, when the industry has hopefully recovered.
Iberia will acquire its global competitor in Spain
Did IAG get a deal on Air Europa?
IAG will now acquire Air Europa for half off, and won’t even have to pay for five years. This allows Iberia to acquire its largest Spanish rival. So, did IAG get an absolutely amazing deal? Maybe, maybe not:
- The main reason for Iberia to take over Air Europa was to eliminate a competitor, rather than any particular strength Air Europa has; would Air Europa have gone out of business if it weren’t for being acquired by IAG?
- Integrating airlines is challenging under normal circumstances, let alone in the middle of a pandemic when demand has decreased significantly, especially when you’re dealing with different work groups
- Arguably part of the reason for an acquisition was to avoid another airline group acquiring Air Europa, though realistically which other airline group could have afforded to acquire the airline right now?
So yeah, IAG is paying less than it previously would have, but I’m not sure I’d go so far as to say that this is a “deal.”
What would have happened to Air Europa if it weren’t for this acquisition?
Bottom line
It’s being reported that IAG will move forward with its acquisition of Air Europa, though at half the original cost, and payment will only take place in 2026. The fact that the deal is going through at all is probably a blessing for Air Europa, because I can’t imagine the airline would have had much of a future otherwise.
What do…