International Airlines Group reaches deal to buy Air Europa for $1.1 billion

Nov 4, 2019

This post contains references to products from one or more of our advertisers. We may receive compensation when you click on links to those products. Terms apply to the offers listed on this page. For an explanation of our Advertising Policy, visit this page.

International Airlines Group, the parent company of British Airways and Iberia, among others, has added another airline to its portfolio. Monday morning, the group announced that it had reached a deal to purchase Air Europa, strengthening the group’s presence in Madrid with goals of making the airport the next European hub.

According to a press release, IAG’s wholly owned subsidiary Iberia has acquired Air Europa under the IAG umbrella. The cash deal, worth 1 billion euro ($1.1 billion), was agreed to between IAG and tourism company Globalia Corp.

Air Europa is currently part of SkyTeam, the global airline alliance which includes Air France-KLM and Delta Air Lines. IAG carriers are in the rival Oneworld alliance, which makes an alliance switch for Air Europa all but certain when the deal is finalized.

The deal allows IAG to continue its growth strategy in Spain. Already owning the flag carrier of the country, Iberia, as well as low-cost carriers Vueling and LEVEL, IAG has a strong hold on the Spanish market. The group plans to use the Madrid hub to increase its presence on the Europe to Latin America and Caribbean routes.

“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,” IAG CEO Willie Walsh said in a statement.

The deal is expected to be completed in the second half of 2020, following government approvals.

IAG turned to Spain for growth opportunities given the limitations at its London Heathrow hub. With Air Europa’s existing route network to Latin America and the Caribbean, IAG believes that Madrid is set to become Europe’s next hub airport, joining the likes of Amsterdam, Frankfurt, Paris and London Heathrow.

In 2018, Air Europa generated 2.1 billion euro ($2.4 billion) in revenue and 100 million euro ($112 million) in operating profit. In the year, it carried 11.8 million passengers on its fleet of 66 aircraft. For long-haul routes, Air Europa operates both Boeing 787 Dreamliners and Airbus A330s.

Business class on Air Europa's 787. (Photo by Nick Ellis/The Points Guy)
Business class on Air Europa’s 787. (Photo by Nick Ellis/The Points Guy)

“We continue to believe there is scope for further consolidation within Europe, and this is the next step,” Walsh said.

Initially, IAG will retain the Air Europa brand and it will be run as a standalone part of Iberia. However, in the future, Walsh said that the group will reduce the number of brand names that it operates in Spain.

After completion of the Air Europa deal, IAG will own six commercial airlines: Aer Lingus, British Airways, Iberia, LEVEL, Vueling and Air Europa.

Featured photo by Fabrizio Gandolfo/SOPA Images/Getty Images.

Chase Sapphire Preferred® Card

WELCOME OFFER: 80,000 Points

TPG'S BONUS VALUATION*: $1,650

CARD HIGHLIGHTS: 2X points on all travel and dining, points transferrable to over a dozen travel partners

*Bonus value is an estimated value calculated by TPG and not the card issuer. View our latest valuations here.

Apply Now
More Things to Know
  • Earn 80,000 bonus points after you spend $4,000 on purchases in the first 3 months from account opening. That's $1,000 when you redeem through Chase Ultimate Rewards®. Plus earn up to $50 in statement credits towards grocery store purchases within your first year of account opening.
  • Earn 2X points on dining including eligible delivery services, takeout and dining out and travel. Plus, earn 1 point per dollar spent on all other purchases.
  • Get 25% more value when you redeem for airfare, hotels, car rentals and cruises through Chase Ultimate Rewards®. For example, 80,000 points are worth $1,000 toward travel.
  • With Pay Yourself Back℠, your points are worth 25% more during the current offer when you redeem them for statement credits against existing purchases in select, rotating categories.
  • Get unlimited deliveries with a $0 delivery fee and reduced service fees on eligible orders over $12 for a minimum of one year with DashPass, DoorDash's subscription service. Activate by 12/31/21.
  • Count on Trip Cancellation/Interruption Insurance, Auto Rental Collision Damage Waiver, Lost Luggage Insurance and more.
  • Get up to $60 back on an eligible Peloton Digital or All-Access Membership through 12/31/2021, and get full access to their workout library through the Peloton app, including cardio, running, strength, yoga, and more. Take classes using a phone, tablet, or TV. No fitness equipment is required.
Regular APR
15.99%-22.99% Variable
Annual Fee
$95
Balance Transfer Fee
Either $5 or 5% of the amount of each transfer, whichever is greater.
Recommended Credit
Excellent/Good

Editorial Disclaimer: Opinions expressed here are the author’s alone, not those of any bank, credit card issuer, airlines or hotel chain, and have not been reviewed, approved or otherwise endorsed by any of these entities.

Disclaimer: The responses below are not provided or commissioned by the bank advertiser. Responses have not been reviewed, approved or otherwise endorsed by the bank advertiser. It is not the bank advertiser’s responsibility to ensure all posts and/or questions are answered.