Just released minutes ago: https://www.iairgroup.com/en/newsroom/press-releases/newsroom-listing/2019/iag-air-europa
International Airlines Group (The company that owns British Airways, Iberia, Aer Lingus, Vueling, LEVEL, etc) has announced it will purchase Air Europa for €1 billion.
- That’s huge.
- Didn’t see this coming.
- More dominance in Madrid… higher fares…
- Air Europa, based in Madrid, has a rather extensive fleet with A330s, 787-8s, and 787-9s.
- Transforms IAG’s Madrid hub into a true rival to Europe’s four largest hubs: Amsterdam, Frankfurt, London Heathrow and Paris Charles De Gaulle.
- Re-establishes IAG as a leader in the highly attractive Europe to Latin America and Caribbean market.
- Offers significant synergy potential in terms of cost and revenue.
- EPS accretive in the first full year and accretive to IAG’s return on invested capital by the fourth year after Completion.
- Completion is expected to take place in H2 2020 following receipt of relevant approvals.
IAG CEO Willie Walsh:
“Acquiring Air Europa would add a new competitive, cost effective airline to IAG, consolidating Madrid as a leading European hub and resulting in IAG achieving South Atlantic leadership, therefore generating additional financial value for our shareholders.
IAG has a strong track record of successful acquisitions, most recently with the acquisition of Aer Lingus in 2015 and we are convinced Air Europa presents a strong strategic fit for the group.”
- Air Europa is one of the leading private airlines in Spain, operating scheduled domestic and international flights to 69 destinations, including European and long-haul routes to Latin America, the United States of America, the Caribbean and North Africa. In 2018, Air Europa generated revenue of €2.1 billion and an operating profit of €100 million. It carried 11.8 million passengers in 2018 and ended the year with a fleet of 66 aircraft.
The Air Europa brand will initially be retained and the company will remain as a standalone profit centre within Iberia run by Iberia CEO Luis Gallego. The managements of IAG and Iberia anticipate opportunities to unlock value through the Acquisition across three key areas:
- Integrating Air Europa into the existing Iberia hub structure at Madrid;
- Creating commercial links between Air Europa and other IAG operating companies, in addition to inclusion into IAG’s joint businesses;
- Integrating Air Europa onto the IAG platform of common services.
- Adding reciprocal intra-group codeshares across all connecting gateways;
- Adjusting timings to maximise connectivity through the Madrid hub;
- Aligning commercial policies and integrating sales forces in home markets;
- Integrating Air Europa into existing IAG joint businesses; and
- Integrating Air Europa into the Avios currency for loyalty.
This is a HUGE shift with another airline. Air Europa is apart of SkyTeam and has codeshares with airlines like Air France, KLM, Delta, Alitalia, and other SkyTeam members.
Updated information shows Air Europa will officially leave SkyTeam: https://www.ch-aviation.com/portal/news/82995-iag-confirms-air-europa-to-exit-skyteam
There has been a giant shift in alliances in the past year or so with China Southern leaving SkyTeam for American Airlines and LATAM leaving Oneworld for Delta.
At this point, IAG is completely gaining dominance in Spain with its main airline Iberia and low-cost carrier Vueling in Barcelona.
What are your thoughts on this?