The airlines Iberia and Air Europa, which operate between Spain and Latin America, have given themselves a period of a month and a half, until the end of January, to study new ways to facilitate their merger, after being forced to break the agreement they reached more than two years ago.
In a statement from International Airlines Group (IAG) to the National Securities Market Commission, the stock market regulator in Spain, Iberia’s parent company detailed this Thursday that it will indemnify Globalia, the group that owns Air Europa, with 75 million euros (about $ 85 million).
This amount will be deducted from the purchase price if they finally reach an agreement to acquire Air Europa. According to IAG, both parties have closed an “agreement of intent” to evaluate, before the end of January 2022, other structures “that may be interesting for both companies, offering similar benefits for their shareholders, customers and employees.”
The statement indicates that in addition to the previously agreed compensation of 40 million euros (about US45 million) if the operation was not closed, IAG will pay Globalia another 35 (almost 40 million dollars), amounts that will reduce the purchase price future and to avoid any litigation in the purchase.
The CEO of IAG, Luis Gallego, considers “very disappointing” that they have had to terminate the current agreement, but argues that the decision makes sense due to market conditions and the deep crisis derived from Covid-19, according to the note. In addition to the fact that the operation under the initially agreed terms was heavy for Iberia, due to Globalia’s delicate financial position, with a debt of some 700 million euros (almost 793 million dollars). Gallego assures that they have committed to analyze new alternatives with Globalia “that could generate significant benefits.”
The initial operation, closed on November 4, 2019, established that Iberia would pay 1,000 million euros in cash (about 1,127 million dollars) for the entire capital of Air Europa, but the pandemic radically changed the situation of the sector and the figure it was lowered to 500 million (about $ 563.5 million).
Air Europa received an injection of 475 million euros (about 535 million dollars) from state funds. The confirmation of the resignation comes shortly before the pronouncement of the European Commission, scheduled for next January 4 but now declining. Brussels had to determine whether the operation generated concurrency problems on some seventy routes in which Iberia and Air Europa are the main or even the only operators. The merger would affect the services that link Madrid with the US or Latin America and some routes within Spain.
Reference-www.eleconomista.com.mx