August 12, 2020

Iberia threatens to thwart the purchase of Air Europa


Madrid

Updated:

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Iberia intends to resolve before the end of the year the purchase of Air Europa. For better or worse. The group is still interested in acquiring its historic competitor, but it does not rule out that the operation be broken by disagreements regarding the acquisition price or the form of payment.

When the macro operation was announced, in November last year, the Spanish parent, IAG, promised that Iberia would pay a billion for Air Europa. An assessment that has been left on wet paper after the outbreak of the coronavirus pandemic, which has limited air travel as much as possible and has threatened the viability of the company founded by Juan José Hidalgo. That is why Iberia and Air Europa have been negotiating a new price and another form of payment for weeks. The agreement is close, but has not yet occurred. “We have to agree on many things and we are waiting to reach a meeting point,” Iberia President Luis Gallego explained yesterday after the presentation of the IAG results.

The executive, who will replace Willie Walsh as CEO of the group in September, also analyzed the capital increase of 2.75 billion that IAG will launch. An operation that, he said, “will not affect the participation of Qatar Airways”, which will maintain 25% of the company. The majority shareholder of IAG has already announced that it will support the expansion, which has been the group’s response to the lack of direct support from the Spanish Government. Other airlines have received public bailouts, which according to Gallego will affect competition within the airline sector.

The group’s forecasts are for not recovering the levels prior to the pandemic until the end of 2023 or the beginning of 2024, which will force airlines such as Iberia and Vueling to adjust their workforce. “The ERTE have been extended until the end of September and we expect them to be extended until the end of the year. When they finish we will sit with the workers, “he said.

The coronavirus had a “devastating” impact on IAG accounts from January to June. The holding company made up of British Airways, Iberia, Vueling, Aer Lingus and Level lost 3,806 million euros, compared to the 806 it had earned a year earlier. The result was motivated by a drop in the group’s capacity (seats offered on its flights) of 95.3% from April to June.

The holding company also announced yesterday that the independent director Javier Ferrán will replace Antonio Vázquez in the group’s non-executive presidency, thus ending a ten-year term.

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