After almost three months with no flights between both countries, this week three airlines are restarting their flights between Brazil…
IAG Lowers Maximum Price for Air Europa Acquisition
International Airlines Group (IAG) — the parent company of British Airways, Aer Lingus and Iberia, among other carriers — seems to be looking to reduce the price it would pay to acquire Spanish carrier Air Europa, below the value of 1 billion euros ($1.18 billion) at which both carriers had agreed to make the transaction last November when the deal was originally announced.
As reported by Spanish tabloid El Confidencial, IAG would be looking to pay between 300 million euros and 400 million euros for Air Europa. As part of the new agreement IAG wants to lock in, the London-based holding company wants to split payment between cash and IAG shares.
The company is seeking a price reduction due to the COVID-19 pandemic slamming the airline industry worldwide, as travel remains limited across much of the world. This reduces the value of Air Europa versus what the company was worth one year ago. Though the deal was initially postponed because of the pandemic, IAG has reiterated that it is still interested in purchasing Air Europa as it sees the long-term value in taking ownership of the carrier’s assets and position in the Spanish market.
Deep in Debt
Earlier this month, Air Europa became the first Spanish carrier to receive government support, as the Spanish government offered more than $500 million in aid in the form of both regular and equity-backed loans. The Spanish government has commented that it wants to get involved in some key aspects of the airline’s decision making. As is to be expected, it wants to weigh in on matters relating to layoffs and wage reductions as protecting employment is, of course, of national interest.
However, the government has also said that it wants to have a say in other strategic elements of Air Europa’s management, including the naming of a new chief executive officer, according to Reuters, as well as restrict the ability to give out dividends to shareholders until all government loans are repaid. The airline has six years to pay off the loans that have been given out by the government to navigate the pandemic.
Though initially, the Spanish government agreed to the possibility of releasing more cash to Air Europa if it was needed, it has since backtracked on that position as the government deems offering more taxpayer money too risky as Air Europa predicts subsequent 600 million euro losses for the second wave of the pandemic and estimates indicate it may run out of cash by the second quarter of 2021 if it continues operating at current cash flow levels. Air Europa has not yet officially released any statement on the matter.
- Eastern Air Lines Lands in Europe - April 14, 2021
- With COVID Cases Rising, South American Aviation Expects Turbulence - April 2, 2021
- American Airlines to Fly Its 737 MAX to South America - March 3, 2021
The aviation industry in Australia and New Zealand is seeing the light at the end of the tunnel. After being…
Virgin Atlantic has launched a unique campaign targeting travelers with their favorite sights and sounds of flying. The advert comes…