Air France-KLM has pulled out of the process to acquire a stake in Spain’s privately owned Air Europa.
A spokesperson for the French-Dutch conglomerate confirmed to Reuters on Thursday that it could not reach an agreement with Globalia, the holding company that controls Air Europa.
It was not immediately clear which issues blocked a possible deal, though it has been widely reported that Air France-KLM rejected Globalia’s $1.1 billion valuation of Air Europa.
Globalia, which is owned by the Hidalgo family, has not commented on Air France-KLM’s decision to withdraw.
Air Europa is looking to raise cash to pay back about $546 million in loans it borrowed from the Spanish government during the COVID-19 pandemic. Earlier this year, it asked interested parties to submit their bids for a roughly 20% stake in the company by early July.
Air France-KLM and Lufthansa Group were reportedly in talks with Air Europa from the start, and it was widely believed that one of them would secure the stake. In June, however, Turkish Airlines entered the bidding war. If Turkish Airlines is successful with its offer, the carrier would become one of the very few non-European companies to own a piece of a European airline.
On a recent earnings call, Lufthansa CEO Carsten Spohr said his company is still in the race, though the negotiations have been complex.
“I cannot yet give an answer whether it will fail or not,” he said of Lufthansa’s bid. “I can confirm that it is very difficult to get this to a success.”
International Airlines Group, the parent company of British Airways and Spanish carrier Iberia, attempted to buy all of Air Europa last year but backed out over scrutiny from regulators. IAG already owns 20% of the airline.
Air Europa is the third-largest airline in Spain, behind Iberia and low-cost carrier Vueling.
