HomeAir LineAir Europa could cost IAG an additional 200 million

Air Europa could cost IAG an additional 200 million

International Airlines Group (IAG), parent of Iberia and Vueling, could be forced to make an additional payment for Air Europa. To the 500 million agreed with the Hidalgo family, of which it already paid the first 100 for the acquisition of 20% of the company, another 200 million could be added (Iberia, convinced that it will have the green light to buy Air Europa).

In its forecasts for the next 12 months, the airline holding company draws two possible scenarios, a normal one, in which the recovery of the airline sector would maintain the expected line, and a pessimistic one, with a deterioration in business. If the second occurs, IAG assumes that once the acquisition of Air Europa is completed, it will have to contribute an additional 200 million euros “for needs related to working capital” (Iberia formalizes the purchase request for Air Europa).

On the other hand, IAG highlights that the value of its 20% in Air Europa, for which it paid 100 million, has skyrocketed in the last year. “As of December 31, 2023, the fair value of the investment was 129 million euros, which represents an increase of 105 million euros compared to the 24 million euros recorded as of December 31, 2022,” notes the group commanded by Luis Gallego.

“The fair value was determined considering Air Europa independently, without taking into account the potential synergies that could be obtained if the group could acquire control of the operations,” he clarifies.

In relation to the outcome of the operation, subject solely and exclusively to the opinion of the General Directorate of Competition of the European Union, Iberia’s parent company believes that “it is likely that it will be completed successfully.” Consequently, it does not consider it appropriate to record a provision of funds for the break fee of 50 million euros that would have to be paid to the Hidalgo family in the event that the operation did not go ahead.

Source: Preferente

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