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20 Jan 2021 | 07:55

IAG cuts payment for Air Europa to €500m from €1bn

(Sharecast News) - British Airways and Iberia parent IAG has revised the terms of its deal for Spanish budget airline Air Europa and will now pay €500m, down from a previous price of €1bn. In addition, the payment will be deferred until the sixth anniversary of the acquisition's completion.

IAG initially agreed to buy Air Europa from Globalia Corporacion Empresarial for €1bn in November 2019 but since then, there have been several press reports suggesting the deal could be done at a lower price.

The company said on Wednesday that it still believes the acquisition is "strategically important" for the future of IAG and Iberia and "positions the group to benefit from growth opportunities as the industry emerges from the unprecedented impact of the Covid-19 crisis".

IAG said the deal increases the importance of its Madrid hub, transforming it into a true rival to Amsterdam, Frankfurt and Paris Charles de Gaulle. It also unlocks further network growth opportunities and delivers "significant" customer benefits through increased choice and schedule flexibility and greater opportunities to earn and redeem miles.

Luis Gallego, IAG's chief executive, said: "Both Iberia and IAG are demonstrating their resilience to face the deepest crisis in aviation's history. Being part of a large group is the best guarantee to overcome current market challenges which will also benefit Air Europa once the transaction is completed.

"I am pleased that we have reached agreement with Globalia to defer payment until well into the expected recovery in air travel following the end of the pandemic and when we expect to be realising significant synergies resulting from the transaction."

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