International Airlines Group has signed an agreement to
acquire Spanish carrier Air Europa for 1 billion euros, with which the group
plans to build Madrid into a "true rival to Europe's four largest
hubs."
Pending regulatory approval, IAG expects to complete the
acquisition in the second half of 2020. It plans to initially run Air
Europa—which flies to 69 destinations, both within Europe and in Latin America,
the Caribbean, the United States and North Africa—under its current brand while
managed by Iberia CEO Luis Gallego. Over time, it would integrate Air Europa
into Iberia's hub structure in Madrid and onto IAG's service platforms. IAG
also will integrate Air Europa into its joint businesses and loyalty program.
In addition, Air Europa will leave SkyTeam under IAG's
integration plans, according to its presentation to investors.
"This is of strategic importance for the Madrid hub,
which in recent years has lagged behind other European hubs," according to
Gallego. "Following this agreement, Madrid will be able to compete with
other European hubs on equal terms with a better position on Europe to Latin
America routes and the possibility to become a gateway between Asia and Latin
America."
Ryanair CEO Michael O'Leary, meanwhile, already has said he
plans to ask regulators to force divestments as a part of the acquisition,
according to Reuters. He told analysts that it was "a bad deal from a
competition point of view" and a "merger to monopoly in Madrid."
IAG was formed in 2011 from the merger of Iberia and British
Airways, and it also owns Spanish low-cost carrier Vueling. Its most recent
acquisition was
Aer Lingus in 2015.