International Airlines Group (IAG) has agreed to buy Air Europa, a move that will further alter the alliance landscape and give the parent company of Madrid-based Iberia and Barcelona-based low-cost carrier Vueling a dominant position in the Spanish market and re-establish its leadership position in the Europe-to-Latin America market. In a regulatory statement released Monday morning, IAG announced it signed definitive transaction agreements with integrated travel company Globalia to buy its airline subsidiary Air Europa for €1 billion ($1.11 billion).
IAG will “initially” retain the Air Europa brand and the company will remain a standalone profit center within Iberia, run by Iberia chief executive Luis Gallego. “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,” said IAG CEO Willie Walsh. Gallego described the deal as “of strategic importance” for Madrid–Barajas Airport, which in recent years has lagged behind the continent’s leading four hubs at Amsterdam, Frankfurt, London Heathrow, and Paris Charles De Gaulle—in spite of the Spanish airport’s spare runway capacity. “Madrid will be able to compete with other European hubs on equal terms with a better position on Europe to Latin America routes and the possibility to become a gateway between Asia and Latin America,” he said.
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