British Airways parent International Airlines Group (IAG) has agreed to fully acquire Air Europa.
It will buy the remaining 80% of the airline from owner Globalia for €400 million.
IAG currently holds a 20% stake.
Air Europa will continue operating under its brand name but will be managed by other IAG airline Iberia.
Air Europa operates a fleet of 50 Boeing 787 Dreamliners and Boeing 737s, and has a strong presence in Latin America.
IAG says the acquisition will give it a strong foothold in the Latin America-Europe market while expanding into Asia.
IAG will pay €200 million once the takeover gets regulatory approval.
The remaining €200 million will be paid in IAG shares and cash.
IAG has originally tried to buy Air Europa for €1 billion in 2019.
That was skippered by competition concerns and the pandemic downturn.
Last year IAG stepped in to grant Air Europa a €100 million loan which it converted into a 20% stake.