British Airways’ parent IAG has halved the amount it will pay for Spanish airline Air Europa from an equity value of €1 billion to €500 million.
The payment will be deferred until six years after the purchase has completed.
IAG’s subsidiary Iberia will buy Air Europa from Globalia, but the revised deal is subject to Iberia reaching an agreement with Sociedad Estatal de Participaciones Industriales (SEPI) regarding the non-financial terms associated with a six year loan of up to €475 million provided by SEPI to Air Europa last November.
The €500 million to be paid by IAG for Air Europa would cover the airline’s total net debt as of the end of 2020. The deal, which must be approved by the European Commission, is expected to be completed in the second half of this year.
UK trade union Unite has previously written to EC to ask it to block the deal.
IAG said it still believes that the acquisition of Air Europa remains strategically important for the future of Iberia and the group. It will increase the importance of IAG’s Madrid hub, it says, transforming it into a rival to Amsterdam, Frankfurt and Paris Charles de Gaulle.
IAG Chief Executive Luis Gallego said: “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.”