International Airlines Group, the owner of British Airways and Iberia, has negotiated a $600 million price cut on its acquisition of Air Europa. It was also able to get a 6 year deferment on the payment.
Both IAG and Air Europa have been severely damaged by the pandemic. IAG has been forced to tap the equity markets for over $3 billion, and Air Europa has been supported by loans from Spain’s state-owned industrial holding company, SEPI.
While the deferral will benefit IAG since it will give time for the airline industry to recover, it will also give Air Europa time to repay its loans to SEPI.
IAG is hoping that the acquisition will not only boost the number of connections the company has from Europe to Latin America, but it should also generate cost and revenue synergies.