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IAG buys Air Europa for €500m …. paid in 2026

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This time last year, IAG, parent of BA and Iberia, announced its intention to acquire Air Europa. Air Europa is the third-largest airline in Spain, after Iberia and Vueling, operating around 15% of all Spanish domestic flights.

The hope was that the deal would create a ‘5th European hub’ in Madrid, bulking up the existing Iberia operation, to sit alongside London, Frankfurt, Paris and Amsterdam. You can read our original article on the plans here.

Air Europa 787

At the time, the going price was €1bn. Clearly a lot has changed since then, including the worst crisis aviation has ever seen.

IAG remains undeterred and has managed to negotiate a 50% discount on the purchase according to Spanish site El Confidencial and as reported by Reuters.

Better yet, IAG wouldn’t have to pay a penny until 2026! This gives IAG plenty of time to get €500m together with most forecasts suggesting that air travel will return to 2019 levels by 2024. IAG will also benefit from the €475m soft loan given to Air Europa by the Spanish Government.

We still need to know how IAG intends to address monopoly concerns in Spain, with the additional of Air Europa giving it dominance of the domestic market with 73%. Ryanair will be the biggest competitor but only has a 15% share.

Air Europa has a young fleet of Boeing 787, Airbus A330, Boeing 737 and Embraer 195 aircraft. The departure of the airline from the SkyTeam alliance seems like for a foregone conclusion.

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Category

British Airways and Avios, SkyTeam alliance partners

Comments (43)

This article is closed to new comments. Feel free to ask your question in the HfP forums.

  • Baji Nahid says:
    19 Dec19 December 04:16

    What a bargain for BA! they’re dancing round the table after the acquisition.

    • John says:
      19 Dec19 December 07:43

      It’s not a bargain at all given the terrible situation of Air Europa.

      BA don’t have much choice but to try building up their continental business as the Brexit will hurt them big time in the UK.

      • Rob says:
        19 Dec19 December 08:45

        It may be a bargain depending on the aircraft deals. They get 45 aircraft albeit presumably leased.

        • insider says:
          19 Dec19 December 09:08

          Not sure of the logic there. Pretty sure IAG would have better terms on its aircraft than Air Europa, and Air Europa’s aircraft will now either be leased or mortgaged up to the hilt. Add in the hefty amounts of government debt recently acquired, I’m not sure there are many net assets left in the company

    • ChrisC says:
      19 Dec19 December 07:51

      It’s a bargain for IAG not BA.

  • Andrew says:
    19 Dec19 December 06:57

    Let’s hope the decent lounges reopen at T3 too so we’re not stuck with the BA rubbish.

    • Jonathan says:
      19 Dec19 December 07:39

      Qantas won’t open till they’re flying regularly again so 2022 realistically, AA obviously not while they’re in T5 & Cathay realistically won’t either when they’ve only got 1 flight/day & a very limited number of other one world flights.

      Flights may well be cheap at the moment but the loss of high quality lounges will be the price to pay for the rock bottom fares.

      • Chris Heyes says:
        19 Dec19 December 08:26

        Jonathan Whilst i totally agree with your comment, as long as flights are cheap and as long as quality hotels at airports are open.
        The lounges are relatively irrelevant except for those who like a drink before their flight.
        We very rarely visit any lounges unless later flight)
        We value the fact that we can stay at the Sofitel (Heathrow) have breakfast then walk from Sofitel and be past security and passport control in 12 minutes (1st of course) timed it, would be a problem if a hold up, lol boarding plane 10 minutes later (22 minutes total)
        For us we never pay flights either, since Air Miles/Avios many years ago used to be totally free now just taxes/surcharge

        • Matty says:
          19 Dec19 December 08:31

          I never realised conformance at T5 didn’t apply when travelling First. Thanks for the tip!

          • ChrisC says:
            19 Dec19 December 09:05

            It’s not something I would ever rely on.

            Conformanace is supposed to be hard wired into the system. As is doors close at T-20

            There may be odd exceptions but one day …

          • Doug M says:
            19 Dec19 December 11:21

            Some posters tales just don’t sit comfortably with reality.

        • Andrew says:
          19 Dec19 December 08:35

          For me, a decent lounge is very much part of the journey and quality food not just drink as you seem to suggest is the only reason for visiting a lounge Chris. Can’t imagine anything worse than cutting it that fine for a flight. But everyone is different.

          • Andrew says:
            19 Dec19 December 08:36

            Also a lounge is included in your ticket price, a night at Sofitel and breakfast isn’t.

          • Chris Heyes says:
            19 Dec19 December 09:08

            Andrew I get the lounge is the start of your journey lol
            My Partner’s journey starts at the Sofitel the day before.
            (she who must be obeyed lol)
            She says its stress free Sofitel afternoon take luggage drop off around 6.00pm back for Costa or free lounge, up for breakfast, no suitcases
            Walk past everyone through 1st passport/security (even traveling Club/Business) she says that makes it stress free for her no looking at watch, just through and on plane works for her so easy for me lol
            (bytheway 22 min is max its took us, we are still there just before 1st passengers start loading)
            As you say each to his own

          • Chris Heyes says:
            19 Dec19 December 09:26

            Andrew I’m willing to bet a few people are rushing from lounge to get to boarding lol
            My view is if you can afford 1st/Business you can afford Sofitel lol
            Plus we don’t pay for any Flights (except taxes/surcharge)
            So our only cost is the Sofitel.
            We book a room for 3 and always get upgraded to a Junior suite every time, as the next upgrade from 3 bedded is a suite (tip for Gold & above)

          • Andrew says:
            19 Dec19 December 09:48

            It’s not about affordability – this site is all about maximising value – and a decent lounge is maximising value from your ticket, whether that’s paid for by cash, miles or your employer. People running around town chasing £5 Shop Small credits confirms this mindset.

          • TGLoyalty says:
            19 Dec19 December 11:00

            You fly first without any luggage or Sofitel still offering their check in service (I thought it was temporary)

  • roberto says:
    19 Dec19 December 07:37

    My LHR to GIB flight 17th Feb is showing as T3.

  • Nick says:
    19 Dec19 December 08:06

    My Bologna flight in august changed to T3.

  • NigelthePensioner says:
    19 Dec19 December 08:11

    What BA say and what BA do are (especially recently) two different things! T3 will re-open when LHR decides it is economically viable which it is unlikely to be with one flight to Poland!!

  • Genghis says:
    19 Dec19 December 08:21

    Our Lisbon flights in August changed T3 to T5 yesterday.

  • MilesOnPoint says:
    19 Dec19 December 08:23

    Might be time for that Amex Centurion lounge at Heathrow Terminal 3 to finally open then! At least it would provide a nice option for BA flights (if the CX lounge does indeed remain closed as comment above suggests).

    • Andrew says:
      19 Dec19 December 08:38

      Oh yes I had forgotten about the infamous T3 Centurion. For many years we have been promised an AA Flagship First lounge too – complete with half bottles of Krug – I wonder if they will instal that in T5 now, or scrap that plan.

  • Algor says:
    19 Dec19 December 08:40

    ‘Krakok has always been a Terminal 5 route.’ – typo

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