IAG is striving to close the acquisition of Air Europa by the end of this year, undeterred by the impact of the air transport crisis, although it is reviewing the structure of the €1 billion ($1.2 billion) deal in response to the downturn.
While outgoing IAG chief Willie Walsh has previously stated that the “best form of consolidation is when the weak disappear” – underlining his belief that inefficient airlines should not be saved by investors – he stressed during the company’s half-year briefing that Air Europa, even under the pressure of the current crisis, was not among these weak operators, and that IAG believes its pursuit is justified.
“We firmly believe Air Europa will not fail,” he insists. “That has been a fundamental factor in our decision.”
Recovery in the Latin American market will lag that in North America which, in turn, will lag the rest of the network, IAG expects. Air Europa has resumed a number of transatlantic services to Latin American destinations, having also restored several European routes.
IAG chief-elect Luis Gallego says the regulatory clearance for the Air Europa acquisition will depend on formally closing the deal.
The two sides are in “active discussions” over a “potential restructuring” of the agreement, to take into account the crisis, says IAG. It has not disclosed the nature of any possible changes, and whether they include the overall acquisition price.
“We consider that we can have [regulatory] approval if we close the deal before the end of the year,” says Gallego, adding that the strategic rationale remains strong.
“The good thing about this deal is that we are in a solid position,” he says.
“We can think in the medium term and the future and we consider that this [arrangement] is the future of group, the future of Iberia, the future of the Madrid hub.”