Pandemic provides IAG with discount

• Published date: 19 December 2020
• Date: 19 December 2020

IAG agreed to buy Air Europa for €1 billion in November last year, but since Covid-19 restrictions wrought havoc on air travel through 2020, the group has been trying to get that price reduced. Reports yesterday suggested that the deal may be done for €500 million, with payment deferred until 2026.

The reported takeover would add Air Europa to a stable already housing the Irish carrier, as well as British Airways, Spain's Iberia and Vueling. The original logic for the deal came from the potential savings and tie-ins it offered each party. It also increased the opportunity for IAG to develop Madrid as a hub with particularly strong links to south and central America. The group expected returns from its investment to materialise by 2025.

Air Europa's fleet is a mix of 45 Airbus and Boeing jets. As these manufacturers also supply IAG's other airlines, the takeover would have made IAG an even larger customer of both than it is now, giving it more clout.

The pandemic has changed all this. Before it...