IAG strikes a £453 million deal to acquire Spanish Air Europa
- IAG strikes a £453 million deal to acquire Spanish Air Europa.
- Air Europa received £430.49 million of state-backed aid in November.
- IAG had originally agreed to buy Air Europa for £910 million.
In a report on Friday, El Confidencial said that International Consolidated Airlines Group (LON: IAG) has struck a deal valued at £453.15 million to buy the 3rd largest Spanish airline, Air Europa. Citing unnamed sources, the digital newspaper said that payment for the acquisition was likely to be delayed until 2026.
IAG shares opened roughly flat on Friday but slid close to 1.5% in the next few hours. Including the price action, the British airline holding company is now trading at 158 pence per share versus a much lower 68 pence per share in May. IAG had started the year at a per-share price of 256 pence per share. The price action should come in handy if you are interested in investing in the stock market.
IAG had originally agreed to buy Air Europa for £910 million
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As per El Confidencial, the agreement was finalised by the two companies late on Thursday. The London-based airline holding company’s Spanish unit, Iberia, refrained from commenting any further on the news on Friday. Air Europa’s parent company, Globalia, is yet to make an official statement as well. Air Europa and DoKaSch Temperature solutions signed master rental agreement in the first week of December.
IAG had originally expressed plans of acquiring Air Europa in November of 2019 for £910 million. Following the Coronavirus pandemic that wreaked havoc on the global air travel industry, however, the owner of British Airways had been negotiating in recent months to slash the price of its deal with the Spanish air carrier.
Air Europa received £430.49 million of state-backed aid last year
The COVID-19 crisis has so far infected more than 75 million people worldwide and caused over 1.6 million deaths. The Spanish government had offered £430.49 million of aid to Air Europa in November to help it cushion the economic blow from the ongoing pandemic. In return, the government secured a right to appoint two directors to the airline’s board.
In order for the agreement between International Consolidated Airlines Group and Air Europe to be completed, the Spanish government must relinquish this right. In a statement in October, IAG said that passenger capacity was 78.6% lower in the fiscal third quarter due to the COVID-19 restrictions.
IAG performed only slightly upbeat in the stock market last year with an annual gain of more than 5%. At the time of writing, it is valued at £7.85 billion.