(Alliance News) - International Consolidated Airlines Group SA on Tuesday said it has exchanged its EUR100 million seven-year unsecured loan to Globalia for a 20% equity stake in Air Europa.
Back in December 2021, FTSE 100-listed airline and parent of British Airways said it would pay EUR75 million to break its agreement to buy Air Europa-owner Globalia. The pair agreed that the EUR75 million could be applied against any future purchase price, were a new agreement was reached for IAG to buy Air Europa.
IAG's Spanish airline Iberia had agreed to buy Air Europa in late 2019 for EUR1 billion, but the price was slashed to EUR500 million after the Covid-19 pandemic grounded the entire travel sector.
Air Europa is a Spanish airline that operates domestic and international flights in Europe, as well as long-haul routes to Latin America, the US, the Caribbean and North Africa. In addition to Madrid-based Iberia, IAG also owns Vueling in Spain. In November, the UK Competition & Markets Authority said it began a probe into the deal.
IAG also owns British Airways and Aer Lingus.
In March 2022, IAG said it had reached an agreement with Globalia under which IAG would make a EUR100 million seven-year unsecured loan to Globalia. IAG also had the option to convert the loan into an up to 20% equity stake in Air Europa.
On Tuesday, IAG confirmed that it has exercised the option to exchange the group's loan for a 20% holding in Air Europa.
In March, Chief Executive Luis Gallego said: "We remain convinced about the strategic importance of this deal to the development and competitiveness of Madrid's hub. Since we started negotiations, the world has changed. This agreement will give us time to evaluate with exclusivity alternative structures that may be of interest to both companies and offer significant benefits for their customers, employees and shareholders."
IAG shares were up 1.4% to 122.31 pence each in London on Tuesday mid-morning.
By Sophie Rose; sophierose@alliancenews.com
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International Airlines (IAG)
