(Adds details on deal, background)
Nov 4 (Reuters) - British Airways owner IAG said on
Monday it had agreed to buy Spanish carrier Air Europa for 1
billion euros ($1.12 billion) in cash, bolstering its ability to
compete for European travel to Latin America and the Caribbean
through Madrid.
Against the backdrop of a challenging environment for
airlines globally, the deal is the latest by a big European
carrier looking westward to boost traffic and average fares.
Air Europa offers domestic and international flights to 69
destinations, including long-haul routes to Latin America, the
United States and the Caribbean.
"Acquiring Air Europa would add a new competitive, cost
effective airline to IAG, consolidating Madrid as a leading
European hub and resulting in IAG achieving South Atlantic
leadership," Willie Walsh, chief executive of IAG said.
Europe's third-largest budget carrier Norwegian Air
, which has shaken up the market for travel across the
Atlantic with cut price fares, last month signed a partnership
with JetBlue Airways to enable European passengers to
book straight through to around 100 U.S. cities.
IAG said the agreement with Air Europa was signed by its
Spanish unit Iberia and added it expected the deal to close in
the second half of next year.
The company, whose profits have taken a hit from pilot
strikes, expects the deal to be earnings accretive in the first
full year after completion and accretive to return on invested
capital by the fourth year.
($1 = 0.8951 euros)
(Reporting by Yadarisa Shabong in Bengaluru; editing by Patrick
Graham)