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FILE PHOTO: An Air Europa Boeing 737-800 plane takes off at Palma de Mallorca airport, Spain, on July 28, 2018.

Jan 20 – International Airlines Group, owner of British Airways and Iberia, has agreed to buy Spain’s Air Europa for 500 million euros ($ 606.7 million) under a modified deal, the companies said in a statement on Tuesday. .

By virtue of the Modification Agreement, “the parties have agreed that the amount to be paid by Iberia for the acquisition of Air Europa (“ equity value ”) will be reduced from 1,000 million euros to 500 million euros, deferring payment 6 years from the closing date of the acquisition transaction. “After originally agreeing to purchase Air Europa for € 1 billion in November 2019, IAG has been pushing to reduce the price as the coronavirus pandemic has plunged the airline industry in deep crisis.

Restrictions on international travel have paralyzed the global transport sector and forced several airlines to rely on state aid. According to the statement, the closing of the operation is expected to take place in the second half of 2021. The operation continues being subject to the approval of the European Commission.

IAG expects the acquisition to generate “significant” cost and revenue synergies, similar to those originally anticipated and now expected to be achieved in 2026.

“It is estimated that the acquisition will have a positive contribution to results in the first full year after the closing of the operation; it contributes considerable value to the Group through the generation of synergies before the payment of the amount agreed on the sixth anniversary after the closing of the operation, and then generate returns on invested capital in line with those historically achieved by IAG, “the group said in a statement.

It is also expected that the net cash outflows from this transaction to IAG will be “minimal in 2021” and that the net cash flows will be positive until at least the repayment of the loan from the Spanish public body SEPI in 2026, when the synergies are expected fusion machines reach their full performance.

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