IAG Group confirmed this morning that it is in an “advanced stage” of negotiations to terminate the agreement signed in November 2019 and amended in January 2021 with Globalia, Air Europa’s controlling holding.
In November of this year Luis Gallego, CEO of IAG, said he felt “less optimistic” about the deal than in previous instances. The acquisition deal was heavily audited by the European Union as the incorporation of Air Europa into IAG and the group’s consequent position in Madrid, one of Europe’s most important hubs, would have been absolutely predominant.
According to El Confidencial, Iberia will pay Air Europa 75 million Euros as compensation for the “temporary suspension” of the current agreement. This temporary suspension allows both companies to avoid the European Union blocking the merger, as the EU authorities were going to set conditions that were impossible to meet in the current industry context.
At the same time, suspending the agreement prevents the possibility of other operators going after Air Europa: Juan José Hidalgo, CEO of Globalia, had recently indicated that the end of negotiations with Iberia would allow it to get closer to Lufthansa, which has expressed interest in expanding in southern Europe.
The new agreement will have to be ratified by the Spanish SEPI (Sociedad Estatal de Participaciones Industriales) and by Air Europa’s creditors, but it is ruled out that they will approve the suspension since a future agreement in another context will allow them to have better chances of recovering their funds.
