December 4, 2020

IAG insists on a price reduction for Air Europa after the public rescue


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Iberia (IAG) wants to move on with the purchase of Air Europa, but demands “to look at everything again” when the rescue of the airline with 475 million euros by SEPI is closed. The airline “holding” insists on its interest in Air Europa as it is “a strategic operation for Spain”, specifically, for the Madrid “hub”, in the words of the CEO of IAG, Luis Gallego. During the question time after the press conference to present the results, Gallego insisted that the context is now completely different from a year ago -when the negotiations with the Hidalgo family were announced- and therefore, the acquisition conditions must also change.

“If the operation is not closed, it will be a missed opportunity for the Madrid hub to compete with the big Europeans where we have seen that governments support their companies flag, “said Gallego, who took the opportunity to send a message to the Executive.

The new scenario will also mean that Iberia’s purchase of Air Europa is delayed until the first quarter of 2021, according to calculations by Gallego himself. “The context is totally different than a year ago, when we offered 1,000 million for a company that is going to close a rescue of 475 million and with negative results as a consequence of the environment we live in,” said the IAG CEO. Along these lines, Gallegó warned that it will be necessary to look at whether the intervention of the Government through the SEPI supposes “a restriction to the capacity of strategic decision” of IAG on Air Europa.

Likewise, Gallego once again stressed the importance of adjusting the agreed price back in November 2019: «You have to negotiate with Air Europa about the price because you are not buying the same. It is not the same to buy a healthy company than one that asks the Government for a ransom so as not to go bankrupt, “he added. In this sense, Gallegó recalled that the airline belonging to Globalia also has a loan line of 140 million euros endorsed by the ICO to which must be added the 475 million euros that the SEPI fund for business reconstruction will foreseeably inject. and 600 million euros of debt.

Historical losses

Due to a slump in demand that will not recover until 2023, IAG announced losses of 5.567 million until September compared to the profit of 1.814 million in that period of 2019. The results of the airline group were affected by the restrictions on air traffic and international movements as well as by the quarantines imposed from different countries to try to stop the coronavirus pandemic.

In the first nine months of the year, revenues totaled 6,565 million (4,488 million were from passengers) and were 66% below the 19,292 million a year ago. The results also reflect an exceptional charge of 2,755 million euros until September due to the write-off of fuel and exchange rate hedges, due to the deterioration of the fleet and restructuring expenses. From the group they report that without this item, the losses would have been 3,176 million after paying taxes.

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