It is confirmed, Iberia (IAG) to buy Air Europa for 500€m to be paid in 2026. Source in Spanish.

https://www.elconfidencial.com/empresas ... 6_2877248/

Payment deferred for 6 years ?!?!

If IAG think this will be a money loser for 6 years, then why are they going ahead with this at all ?

The same journalist (and newspaper) wrote an article 4 weeks ago stating that IAG would by Air Europa with IAG shares. Funnily, one day later, other journalists (and newspapers) dismissed the agreement to buy Air Europa with shares.

Now there's (apparently) a plot twist in the same journalist/newspaper.

Today the same newspaper - in addition to the "exclusive new 500 million deferred purchase", published an article titled:
"The new agreement between IAG and Air Europe: a logical solution to a cuestionable acquisition" - circling around the agreement to buy Air Europa with shares (the same newspaper dismissed that story already).

https://www.elconfidencial.com/mercados ... e_2836727/

Today, they've also published: "IAG and Air Europa: an agreement everyone benefits from, but only one assumes the risk" --- all around their "exclusive" story about the deferred acquisition of Air Europa by IB.

https://www.elconfidencial.com/mercados ... o_2877471/

NO other Spanish newspapers has any news, rumours or updates about the Air Europa transaction.

I'll just wait until IAG fills a SEC filling with the "new" or "updated" agreement.

Reuters has repeated the El Confidencial outline.

British Airways and Iberia owner IAG has agreed to buy Spain’s Air Europa for 500 million euros ($613 million) with payment deferred until 2026, website El Confidencial reported.
...
For the sale to proceed, the Spanish government must waive its right to appoint two directors to Air Europa’s board, one of the conditions of a 475 million euro state aid package approved last month.

https://www.reuters.com/article/aireuro ... SKBN28S1KC

Color me skeptical on this one even if international news agencies are echoing the report coming from elconfidencial. They've been doing this kind of 'scoop' reporting for very long time and in the last few months they've had quite a number of articles on this deal and in many cases just dismissing their previous reporting on the topic so I won't be surprised if next week they've another report saying the government has veto'd the operation.

IMHO Air Europa is worth 0 at the moment, it was worth 1000M euros to Iberia last year as it was an excellent opportunity to get rid of a its main competitor but right now the panorama is completely different and I don't see any other airlines neither IAG having an appetite for acquisitions in the current climate.

My favorite part of the report is that the journalist states that the payment for 2026 actually is 500M + interests in a effort to give this more credibility, I wonder what kind of interest rate they should expect in an environment where we're seeing near zero or negatives rates.

debonair wrote:

I think, better I hope, this merger will happen only with major conditions set by EU competition law. In Spain IAG will have IBERIA, IBERIA Express, Vueling, LEVEL and AirEuropa. And also the Spanish to Latin/South America market will be dominated by only oneworld: LATAM/IBERIA. A gap that neither Volotea (domestically), nor Plus Ultra (Transatlantic) will fill.
So IAG will hopefully think twice to bid millions of Euro in a carrier worth nothing, plus loosing slots etc. worth millions of Euro to fulfil the merger!

Same situation happening in FRA, CDG, AMS, MUC, ZRH, VIE, BRU...

debonair wrote:

I think, better I hope, this merger will happen only with major conditions set by EU competition law. In Spain IAG will have IBERIA, IBERIA Express, Vueling, LEVEL and AirEuropa. And also the Spanish to Latin/South America market will be dominated by only oneworld: LATAM/IBERIA. A gap that neither Volotea (domestically), nor Plus Ultra (Transatlantic) will fill.
So IAG will hopefully think twice to bid millions of Euro in a carrier worth nothing, plus loosing slots etc. worth millions of Euro to fulfil the merger!

Funny how you don't have any issues with AMS, FRA, CDG etc..

Also, LATAM is not oneworld.

tobsw wrote:

The same journalist (and newspaper) wrote an article 4 weeks ago stating that IAG would by Air Europa with IAG shares. Funnily, one day later, other journalists (and newspapers) dismissed the agreement to buy Air Europa with shares.

Now there's (apparently) a plot twist in the same journalist/newspaper.

Today the same newspaper - in addition to the "exclusive new 500 million deferred purchase", published an article titled:
"The new agreement between IAG and Air Europe: a logical solution to a cuestionable acquisition" - circling around the agreement to buy Air Europa with shares (the same newspaper dismissed that story already).

https://www.elconfidencial.com/mercados ... e_2836727/

Today, they've also published: "IAG and Air Europa: an agreement everyone benefits from, but only one assumes the risk" --- all around their "exclusive" story about the deferred acquisition of Air Europa by IB.

https://www.elconfidencial.com/mercados ... o_2877471/

NO other Spanish newspapers has any news, rumours or updates about the Air Europa transaction.

I'll just wait until IAG fills a SEC filling with the "new" or "updated" agreement.

Has IB/IAG officially confirm or deny any of the information from el confidencial in the last month or so?

julianrv wrote:

I wonder what kind of interest rate they should expect in an environment where we're seeing near zero or negatives rates.

Interest rates reflect risk premiums, not just cost of money. Look at what American and United were paying with their last commercial borrowings before they accepted U.S. Treasury loan facilities.

kelual wrote:

tobsw wrote:

The same journalist (and newspaper) wrote an article 4 weeks ago stating that IAG would by Air Europa with IAG shares. Funnily, one day later, other journalists (and newspapers) dismissed the agreement to buy Air Europa with shares.

Now there's (apparently) a plot twist in the same journalist/newspaper.

Today the same newspaper - in addition to the "exclusive new 500 million deferred purchase", published an article titled:
"The new agreement between IAG and Air Europe: a logical solution to a cuestionable acquisition" - circling around the agreement to buy Air Europa with shares (the same newspaper dismissed that story already).

https://www.elconfidencial.com/mercados ... e_2836727/

Today, they've also published: "IAG and Air Europa: an agreement everyone benefits from, but only one assumes the risk" --- all around their "exclusive" story about the deferred acquisition of Air Europa by IB.

https://www.elconfidencial.com/mercados ... o_2877471/

NO other Spanish newspapers has any news, rumours or updates about the Air Europa transaction.

I'll just wait until IAG fills a SEC filling with the "new" or "updated" agreement.

Has IB/IAG officially confirm or deny any of the information from el confidencial in the last month or so?

Nope. But they won't anyway - you know, they trade in the stock market, whenever they reach a (new) agreement, they will inform the stock market, both in London (https://www.londonstockexchange.com/new ... day-s-news) and also in Madrid, as a "hecho relevante" https://www.bolsamadrid.es/esp/aspx/Emp ... timos.aspx

It's just very interesting how no other news outlets (Expansion, CincoDias,...) have anything remotely similar to whatever the guys in ElConfidencial write.

Dont understand this buyout at all. Anything AE were doing IB/IAG could have just done without all the expense of buying and integrating. It cant all be about expanding South America when BA have essentially culled South America.
IAG should let this go....

debonair wrote:

Btw. if LATAM is not oneworld, which other alliance they belong to?

None. They left Oneworld earlier this year.

They have a strong partnership with Delta instead of American now. While SkyTeam is possible, they may not join any alliance.

All this does is increase IAG's domination of Europe-Latin America which is a huge market (Latin Americans don't need a visa for the most part to visit Western Europe).

by738 wrote:

Dont understand this buyout at all. Anything AE were doing IB/IAG could have just done without all the expense of buying and integrating. It cant all be about expanding South America when BA have essentially culled South America.
IAG should let this go....

It makes sense if you look at it from the viewpoint that they have purchased a brand.

The Air Europa brand allows them to have a Europe wide brand that would allow them to consolidate Level, Vuelling and Air Europa all under one brand - Air Europa.

McG1967 wrote:

It makes sense if you look at it from the viewpoint that they have purchased a brand.

The Air Europa brand allows them to have a Europe wide brand that would allow them to consolidate Level, Vuelling and Air Europa all under one brand - Air Europa.

Not really. Vueling is way more valuable as a brand compared to Air Europa.

Air Europa, as a brand, -if the purchase happens- is going to disappear.

debonair wrote:

I think, better I hope, this merger will happen only with major conditions set by EU competition law. In Spain IAG will have IBERIA, IBERIA Express, Vueling, LEVEL and AirEuropa. And also the Spanish to Latin/South America market will be dominated by only oneworld: LATAM/IBERIA. A gap that neither Volotea (domestically), nor Plus Ultra (Transatlantic) will fill.
So IAG will hopefully think twice to bid millions of Euro in a carrier worth nothing, plus loosing slots etc. worth millions of Euro to fulfil the merger!

Is Plus Ultra able to grow or does it want to? Despite their small route map they are the only European competitor on Spain-South American routes. If they could take over some of those UX routes maybe it would be seen as a more balanced competition. That said Plus Ultra‘s fleet is just a few ageing 340’s.

by738 wrote:

Dont understand this buyout at all. Anything AE were doing IB/IAG could have just done without all the expense of buying and integrating. It cant all be about expanding South America when BA have essentially culled South America.
IAG should let this go....

Globalia was shopping around to sell Air Europa. If IB/IAG did not make a move, then we would have seen LH or AF-KL make a move. MAD as a Latin America hub is a powerful franchise. Why allow the competition to move in?

BA culling South America? They fly from LHR to the biggest markets in the continent: EZE, GIG, GRU and SCL. Only BOG is missing.

x1234 wrote:

All this does is increase IAG's domination of Europe-Latin America which is a huge market (Latin Americans don't need a visa for the most part to visit Western Europe).

Why do you say that IAG dominate the market?
IAG states that its pre-covid share of the Europe-Latin America market was 19%.
IAG say the AF/KL share was 19% and the Latam share was 8%.

If the IAG acquisition of Air Europa goes ahead, IAG say they will have a 26% share of the Europe-Latin America market.
If Latam join Skyteam, then AF/KL plus Latam will have a 27% share of the Europe-Latin America market.

dcajet wrote:

by738 wrote:

Don't understand this buyout at all. Anything AE were doing IB/IAG could have just done without all the expense of buying and integrating. It cant all be about expanding South America when BA have essentially culled South America.
IAG should let this go....

Globalia was shopping around to sell Air Europa. If IB/IAG did not make a move, then we would have seen LH or AF-KL make a move. MAD as a Latin America hub is a powerful franchise. Why allow the competition to move in?

I'm not convinced that Lufthansa would have been interested in Air Europa. Lufthansa have acquired the larger carrier in a number of markets (Swiss, Austrian, Brussels Airlines). However, when they owned bmi, a smaller carrier, they found themselves caught between BA and low cost carriers (easyJet and Ryanair). I don't see Lufthansa rushing to repeat that sort of unhappy experience.
Air France-KLM do not have a history of growth through acquiring smaller carriers at non-AF-KL hubs. I doubt if they would have rushed into buying Air Europa.
Air Europa has more value for IAG than for Lufthansa or AF-KL.

tobsw wrote:

McG1967 wrote:

It makes sense if you look at it from the viewpoint that they have purchased a brand.

The Air Europa brand allows them to have a Europe wide brand that would allow them to consolidate Level, Vuelling and Air Europa all under one brand - Air Europa.

Not really. Vueling is way more valuable as a brand compared to Air Europa.

Air Europa, as a brand, -if the purchase happens- is going to disappear.

Vueling more valuable than Air Europa? Really? Not my cup of tea both of them but seriously I think u r wrong

BealineV953 wrote:

dcajet wrote:

by738 wrote:

Don't understand this buyout at all. Anything AE were doing IB/IAG could have just done without all the expense of buying and integrating. It cant all be about expanding South America when BA have essentially culled South America.
IAG should let this go....

Globalia was shopping around to sell Air Europa. If IB/IAG did not make a move, then we would have seen LH or AF-KL make a move. MAD as a Latin America hub is a powerful franchise. Why allow the competition to move in?

I'm not convinced that Lufthansa would have been interested in Air Europa. Lufthansa have acquired the larger carrier in a number of markets (Swiss, Austrian, Brussels Airlines). However, when they owned bmi, a smaller carrier, they found themselves caught between BA and low cost carriers (easyJet and Ryanair). I don't see Lufthansa rushing to repeat that sort of unhappy experience.
Air France-KLM do not have a history of growth through acquiring smaller carriers at non-AF-KL hubs. I doubt if they would have rushed into buying Air Europa.
Air Europa has more value for IAG than for Lufthansa or AF-KL.

Who mentioned Lufthansa?

by738 wrote:

BealineV953 wrote:

dcajet wrote:

Globalia was shopping around to sell Air Europa. If IB/IAG did not make a move, then we would have seen LH or AF-KL make a move. MAD as a Latin America hub is a powerful franchise. Why allow the competition to move in?

I'm not convinced that Lufthansa would have been interested in Air Europa. Lufthansa have acquired the larger carrier in a number of markets (Swiss, Austrian, Brussels Airlines). However, when they owned bmi, a smaller carrier, they found themselves caught between BA and low cost carriers (easyJet and Ryanair). I don't see Lufthansa rushing to repeat that sort of unhappy experience.
Air France-KLM do not have a history of growth through acquiring smaller carriers at non-AF-KL hubs. I doubt if they would have rushed into buying Air Europa.
Air Europa has more value for IAG than for Lufthansa or AF-KL.

Who mentioned Lufthansa?

See post 424.
The poster said "If IB/IAG did not make a move, then we would have seen LH or AF-KL make a move."

According to this link: https://www.scramble.nl/civil-news/iag- ... 3xzefPk250 and the Spanish press IAG has acquired Air Europa for 500 million Euros after reaching a final agreement with Globalia.

SeaKing4 wrote:

According to this link: https://www.scramble.nl/civil-news/iag- ... 3xzefPk250 and the Spanish press IAG has acquired Air Europa for 500 million Euros after reaching a final agreement with Globalia.

Sorry didn’t read 401 before I posted this.

So when does IAG actually take control of Air Europa? I have searched, and none of the news sites I have checked makes this clear.

No one knows.

IAG neither UX have confirmed a 'new' purchase agreement.

There are just baseless rumours.

tobsw wrote:

No one knows.

IAG neither UX have confirmed a 'new' purchase agreement.

There are just baseless rumours.

IAG confirms, and looks like the rumors were actually spot on:

https://www.iairgroup.com/en/newsroom/p ... air-europa

Under the terms of the Amendment Agreement, the parties have agreed that the amount to be paid by Iberia for Air Europa will be reduced from an equity value of €1 billion to €500 million with payment deferred until the sixth anniversary of the Acquisition’s completion.

The revised terms in the Amendment Agreement are conditional on the satisfactory negotiation between Iberia and Sociedad Estatal de Participaciones Industriales (“SEPI”) regarding the non-financial terms associated with the financial support provided by SEPI to Air Europa during 2020. Iberia intends to begin discussions with SEPI shortly concerning these conditions.

Assuming satisfaction of all conditions of the Amendment Agreement and the Acquisition, completion is expected to take place in the second half of 2021. The Acquisition is still subject to approval by the European Commission.

I think AirFrance/KLM will be kind of *MAD* at this take over. (Pun intended)

onwFan wrote:

tobsw wrote:

No one knows.

IAG neither UX have confirmed a 'new' purchase agreement.

There are just baseless rumours.

IAG confirms, and looks like the rumors were actually spot on:

https://www.iairgroup.com/en/newsroom/p ... air-europa

Under the terms of the Amendment Agreement, the parties have agreed that the amount to be paid by Iberia for Air Europa will be reduced from an equity value of €1 billion to €500 million with payment deferred until the sixth anniversary of the Acquisition’s completion.

The revised terms in the Amendment Agreement are conditional on the satisfactory negotiation between Iberia and Sociedad Estatal de Participaciones Industriales (“SEPI”) regarding the non-financial terms associated with the financial support provided by SEPI to Air Europa during 2020. Iberia intends to begin discussions with SEPI shortly concerning these conditions.

Assuming satisfaction of all conditions of the Amendment Agreement and the Acquisition, completion is expected to take place in the second half of 2021. The Acquisition is still subject to approval by the European Commission.

Nice deal for IAG i guess. Looking at Air Europas fleet is it just me that thinks IAG acquiring the max is even more likely. Air Europa coming in sort of breaks their monopoly on Airbus narrow bodies

onwFan wrote:

Under the terms of the Amendment Agreement, the parties have agreed that the amount to be paid by Iberia for Air Europa will be reduced from an equity value of €1 billion to €500 million with payment deferred until the sixth anniversary of the Acquisition’s completion.

I don't think I would want to be an unsecured creditor of IAG waiting six years after the transaction closing date but there probably are few interested, qualified (EU rules, Spanish subsidy restrictions) buyers with quick money.

If that turns out to be wise, will have to be seen. The EU will demand traffic rights and slots to be handed over to the competition. (and before you wonder, it is not about slots at MAD and BCN but about slots at the destinations many of whom are slot limited in normal times)

This could be the start of an even stronger low cost competition in MAD and BCN.

seahawk wrote:

(and before you wonder, it is not about slots at MAD and BCN but about slots at the destinations many of whom are slot limited in normal times)

Most of Air Europa’s destinations are not particularly restricted, and those that are Air Europa typically has a minimal presence. They are not a large airline at all.

Polot wrote:

seahawk wrote:

(and before you wonder, it is not about slots at MAD and BCN but about slots at the destinations many of whom are slot limited in normal times)

Most of Air Europa’s destinations are not particularly restricted, and those that are Air Europa typically has a minimal presence. They are not a large airline at all.

I guess they dont care about being slot limited cause (and if rumours are right) they will try to expand their network to Africa and Asia, so they willmove planes from one place to another.

Maybe their strategy may work taking into acccount AF/KL/LH reactions to this purchase...

PANAMsterdam wrote:

I think AirFrance/KLM will be kind of *MAD* at this take over. (Pun intended)

Opus99 wrote:

Nice deal for IAG i guess. Looking at Air Europas fleet is it just me that thinks IAG acquiring the max is even more likely. Air Europa coming in sort of breaks their monopoly on Airbus narrow bodies

It's just you. The main target of the company is LH. IB will likely use its national SH fleet to feed Air Europa, and IB getting a mixed fleet is a wet dream of some that the company can't (and won't) afford. Keeping the SH fleet in place once they can use the code sharing with IB makes absolute no sense, specially post covid.

In the long run (6-8 years, once the deal is sealed), it seems obvious that IB will just digest the whole brand (as will do with Level) and get rid of orphan fleets, relocating 787s within IAG and phasing out the Embraers and 787s, the latests will be circa 15 yo by then.

Jayafe wrote:

Opus99 wrote:

Nice deal for IAG i guess. Looking at Air Europas fleet is it just me that thinks IAG acquiring the max is even more likely. Air Europa coming in sort of breaks their monopoly on Airbus narrow bodies

It's just you. The main target of the company is LH. IB will likely use its national SH fleet to feed Air Europa, and IB getting a mixed fleet is a wet dream of some that the company can't (and won't) afford. Keeping the SH fleet in place once they can use the code sharing with IB makes absolute no sense, specially post covid.

In the long run (6-8 years, once the deal is sealed), it seems obvious that IB will just digest the whole brand (as will do with Level) and get rid of orphan fleets, relocating 787s within IAG and phasing out the Embraers and 787s, the latests will be circa 15 yo by then.

And the 737s that already exist in the fleet what happens to them? And the MAXs already built. BA has a massive replacement program coming up eventually. There’s use for those jets at other IAG airlines. It makes it easier for IAG to further the MAX deal if the jets now come under their books. They can move the order to BA. Which was slated to get about 30 of that MAX order

Congratulations to IAG!

Polot wrote:

seahawk wrote:

(and before you wonder, it is not about slots at MAD and BCN but about slots at the destinations many of whom are slot limited in normal times)

Most of Air Europa’s destinations are not particularly restricted, and those that are Air Europa typically has a minimal presence. They are not a large airline at all.

But combined they will have quite a strong presence on many routes, like MAD-DUS for example. And with DUS slot limited, I can easily see that they will need to hand over slot pairs so that a competitor can enter the route.

Commission opens in-depth investigation into proposed acquisition of Air Europa by IAG

""At this stage, the Commission is concerned that the proposed transaction could significantly reduce competition on 70 origin and destination (O&D) city pairs within and to/from Spain, on which both airlines offer direct services. On some routes, IAG and Air Europa have been the only two airlines operating.

The Commission is also concerned about the effect of the proposed transaction on routes on which other airlines rely on Air Europa's domestic and short-haul network for their own operations at the Madrid airport and a number of other EU airports. Without Air Europa's feeder traffic, some airlines may decide to terminate their services to international destinations also served by IAG, reducing choice for travellers.

At this stage, the Commission found that competition from other airlines, including from European low-cost carriers would likely not provide a sufficient constraint on the merged entity on the routes where it would hold high market shares. Similarly, the competitive pressure of European network airlines or Latin American airlines appears insufficient.""

.

""The proposed transaction was notified to the Commission on 25 May 2020. IAG and Air Europa have decided not to submit commitments. The Commission has now 90 working days, until 5 November 2021, to take a decision. The opening of an in-depth investigation does not prejudge the outcome of the investigation.""

https://ec.europa.eu/commission/pressco ... ip_21_3328

tobsw wrote:

Commission opens in-depth investigation into proposed acquisition of Air Europa by IAG

""At this stage, the Commission is concerned that the proposed transaction could significantly reduce competition on 70 origin and destination (O&D) city pairs within and to/from Spain, on which both airlines offer direct services. On some routes, IAG and Air Europa have been the only two airlines operating.

The Commission is also concerned about the effect of the proposed transaction on routes on which other airlines rely on Air Europa's domestic and short-haul network for their own operations at the Madrid airport and a number of other EU airports. Without Air Europa's feeder traffic, some airlines may decide to terminate their services to international destinations also served by IAG, reducing choice for travellers.

At this stage, the Commission found that competition from other airlines, including from European low-cost carriers would likely not provide a sufficient constraint on the merged entity on the routes where it would hold high market shares. Similarly, the competitive pressure of European network airlines or Latin American airlines appears insufficient.""

.

""The proposed transaction was notified to the Commission on 25 May 2020. IAG and Air Europa have decided not to submit commitments. The Commission has now 90 working days, until 5 November 2021, to take a decision. The opening of an in-depth investigation does not prejudge the outcome of the investigation.""

https://ec.europa.eu/commission/pressco ... ip_21_3328

Apparently, IAG has intentionally not yet disclosed the remedies with Volotea and World2Fly and instead decided to go ahead with the longer process. Iberia has chosen this route, Cinco Días points out, to avoid resources that may be presented by large European groups such as Lufthansa and Air France-KLM in the face of the presumable strengthening with the entry of Air Europa into the IAG group. The "new strategy before Brussels to protect Air Europa's operation and streamline the procedures for the purchase to be effective during the second half of this year".

https://www.preferente.com/noticias-de- ... 10367.html

Opus99 wrote:

Jayafe wrote:

Opus99 wrote:

Nice deal for IAG i guess. Looking at Air Europas fleet is it just me that thinks IAG acquiring the max is even more likely. Air Europa coming in sort of breaks their monopoly on Airbus narrow bodies

It's just you. The main target of the company is LH. IB will likely use its national SH fleet to feed Air Europa, and IB getting a mixed fleet is a wet dream of some that the company can't (and won't) afford. Keeping the SH fleet in place once they can use the code sharing with IB makes absolute no sense, specially post covid.

In the long run (6-8 years, once the deal is sealed), it seems obvious that IB will just digest the whole brand (as will do with Level) and get rid of orphan fleets, relocating 787s within IAG and phasing out the Embraers and 787s, the latests will be circa 15 yo by then.

And the 737s that already exist in the fleet what happens to them? And the MAXs already built. BA has a massive replacement program coming up eventually. There’s use for those jets at other IAG airlines. It makes it easier for IAG to further the MAX deal if the jets now come under their books. They can move the order to BA. Which was slated to get about 30 of that MAX order

The Air Europa 737 fleet is small (18 738s and a handful of MAXs) and mostly leased. It will be fairly easy to eliminate the 737 if IAG wishes to. By comparison, just in its Spanish airlines, IAG has 180+ A32x.

EU antitrust regulators extend decision deadline for IAG-Air Europa deal to Dec. 3

https://www.reuters.com/business/aerosp ... 021-07-22/

LAXintl wrote:

EU antitrust regulators extend decision deadline for IAG-Air Europa deal to Dec. 3

https://www.reuters.com/business/aerosp ... 021-07-22/

Would you consider this as good news or bad news? Just curious.