The IAG holding company, owner of Iberia, Vueling, British Airways or Level, has converted the loan of 100 million euros granted to Globalia last March into a 20% stake in Air Europa, an airline belonging to the Hidalgo family group. When IAG announced the loan on March 17 of this year, it highlighted that the operation included the option of exchanging it for shares, with the aim of acquiring 100% of Air Europa in the medium term if the negotiations initiated with the Hidalgos before the pandemic come to fruition and the European authorities give the green light. Finally, the Spanish-British conglomerate has exercised its option to convert these one hundred million euros into shares, it informed the CNMV yesterday.
This agreement was conditional on Globalia receiving the approval of the syndicated banks that facilitated the loan contract partially guaranteed by the Official Credit Institute (ICO) and the State Industrial Participation Company (SEPI). Specifically, the Spanish government injected 615 million euros into the Globalia airline through a loan guaranteed by the ICO for an amount of 140 million and a rescue of 475 million authorized by SEPI. IAG's participation in Air Europa, now the company's second shareholder after the Hidalgos, has had the authorization of the Government, Globalia's main creditor. As a condition to carry it out, Iberia's parent company will not be able to intervene in the management of the airline or enter its board of directors.
Iberia, an IAG airline, announced the purchase of Air Europa for 1,000 million euros in November 2019, but the arrival of the pandemic and the collapse of the air business stopped the operation. The airline holding company first reduced the valuation of Air Europa to 500 million euros and then compensated Globalia with 75 million to stop the purchase and re-negotiate.
Despite the fall in the air market and the delicate financial situation of Air Europa – losses of 304 million were added to its debt in the last financial year – Iberia continues to defend the purchase of the airline and hopes that the European authorities will authorize the acquisition in the next months.
Taking over Air Europa, they maintain at IAG, will turn Barajas airport into a great hub, focused on connections with Latin America and capable of competing with the large European airports.
