IAG fight back. After the president of the holding company, Louis Gallegorevealed a few weeks ago that the Hidalgo family airline was talking to “other companies” for the sale of Air Europa, IAG has announced a new deal which grants the company a “period of one year exclusivity while the talks are taking place and is accompanied by a right to match any third party offer by the airline in next three years“. The pact happens because IAG grants Globalia a unsecured loan of 100 million euros to seven years with the option to convert it into a stake of up to 20% in the capital of Air Europa.
“We remain convinced of the strategic importance of this operation for the development and competitiveness of the Madrid hub. Since we started negotiations, the world has changed. This agreement will give time for evaluate exclusively alternative structures that may be of interest to both companies and that offer significant benefits for their clients, employees and shareholders”, said the president Luis Gallego in a statement sent to the National Securities Market Commission (CNMV).
The IAG group agreed in November 2019 to buy Air Europa for 1,000 million euros, but the arrival of the pandemic put a stop to the operation. The coronavirus caused most planes to stay on land and that wreaked havoc on airline accounts. Air Europa needed a bailout from the Spanish Government worth 475 million euros and a ICO credit worth 140 million euros. That forced Iberia to rethink the purchase in January of last year: it lowered the price to 500 million euros to be paid in five years.
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A few months later the agreement began to falter. When traffic seemed to be beginning to recover, at the end of last year, Iberia paid €75 million to the company of hidalgo family (double the 40 million euros established in the contract in case of breaking the agreement) with the aim of renegotiate terms during the month of January to reach a new agreement that could have the approval of the European Comission. But at the end of February there was no agreement and the airline that runs Javier Sanchez Prieto revealed that Air Europa was holding talks for its sale with other companies.
Now, Iberia has turned the operation upside down with this agreement, which is conditional on Globalia receiving the approval of the syndicated banks that facilitated the loan contract partially guaranteed by the Official Credit Institute (ICO) and the State Society of Industrial Participations (SEPI).