IAG still eager to buy Air Europa, waits for gov’t aid

IAG International Airlines Group is still interested in acquiring Air Europa (UX, Palma de Mallorca) but is waiting for clarification on the terms of Spanish state aid to the carrier, Group Chief Executive Luis Gallego said during a quarterly earnings call. “We believe that the strategic rationale remains strong. And that’s why we are in discussions with Air Europa. We know that they are working with the Spanish government to receive a package to support the company. We are waiting to see the package and the conditions attached. And at that moment, we will continue the negotiations to see if the conditions that we can close in this new situation,” he said. He added that IAG continues to see the deal as a positive development for the Europe-Latin American market. The Spanish Ministry of Finance formally authorised a EUR475 million euro (USD555 million) loan to Air Europa on November 3, 2020. The aid will consist of two separate loans, one of EUR240 million (USD280 million) and the other of EUR235 million (USD275 million). The aid will be granted under the framework of the COVID-related Solvency Support Fund of Strategic Companies (Fondo de Apoyo a la Solvencia de Empresas Estratégicas), which is financed by state-owned industrial holding SEPI. Ryanair suggested earlier it would seek to legally block any state assistance to Air Europa. IAG initially agreed to acquire Air Europa, via its subsidiary Iberia (IB, Madrid Barajas), for EUR1 billion (USD1.15 billion) back in late 2019. In July, the bid was reportedly cut to EUR500 million (USD580 million). IAG itself posted a EUR1.3 billion (USD1.5 billion) operating loss for the third quarter of 2020. Having operated a quarter of its normal capacity between July and September 2020, it was planning to cap operations at less than 30% of last year’s capacity in the final quarter of 2020. Despite the losses, IAG said it still had EUR9.3 billion (USD10.8 billion) liquidity, roughly on par with the level posted in March 2020.