Air Europa Sale Stalls as Bidders Reject €1B Valuation

Talks between Lufthansa Group and Air France-KLM to acquire a stake in Air Europa (UX, Palma de Mallorca) have stalled due to a disagreement over valuation. Spanish outlet El Confidencial reports that both airline groups rejected the EUR1 billion (USD1.13 billion) price tag proposed by Globalia, the Hidalgo family-owned parent company of Air Europa.

Both Lufthansa and Air France-KLM were reportedly interested in acquiring a 25% stake, although the latter had earlier considered a 51% share. Hainan Airlines and a Middle Eastern investment fund also reportedly expressed interest, though it’s unclear if the high valuation discouraged them.

Globalia justifies the price based on Air Europa’s 2023 performance, including a EUR116 million (USD131 million) gross profit on EUR2.9 billion (USD3.3 billion) in revenue. However, the airline remains burdened with debt, including a EUR475 million (USD537 million) state-backed loan from Spain’s sovereign wealth fund SEPI, due in 2026. The government has reportedly considered rescheduling repayments due to concerns over the airline’s ability to meet them.

Air Europa also previously borrowed EUR141 million (USD159 million) from Spain’s state credit bank (ICO), which it has since repaid.

The 2020 SEPI bailout has sparked controversy, with European Parliament member Dolors Montserrat calling for a European Commission investigation into possible political favoritism and conflicts of interest. The Commission has not commented on whether it will act on the request.

Globalia currently owns 80% of Air Europa. IAG Group holds the remaining 20% after a previously planned full acquisition was scrapped due to EU regulatory conditions.

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Sources: AirGuide Business airguide.info, bing.com, ch-aviation.com