International Airlines Group (IAG) has reached an agreement to acquire Air Europa for €1 billion ($1.6 billion).
The deal will see yet another Spanish carrier join the multi-national’s repertoire of airlines that includes Iberia and Vueling.
According to estimates by Forbes, this will see IAG operate a staggering 84 per cent of seats sold domestically in Spain.
Furthermore, IAG believes the agreement will increase the importance of the Madrid hub with the multi-national aiming to turn it into a rival for Europe’s big four airports: Amsterdam, Frankfurt, London Heathrow, and Paris Charles De Gaulle.
“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, therefore generating additional financial value for our shareholders,” IAG chief executive Willie Walsh said.
“IAG has a strong track record of successful acquisitions, most recently with the acquisition of Aer Lingus in 2015, and we are convinced Air Europa presents a strong strategic fit for the group.”
The completion of the agreement is expected to take place in the second half of 2020 following receipt of relevant approvals.
IAG expects the completion of the acquisition to generate “significant revenue synergies” by 2025, including adding joint intra-group codeshares across all connecting gateways and adjusting timings to maximise connectivity through the Madrid hub.