British Airways owner International Airlines Group is taking over Spanish carrier Air Europa for €1 billion.

The deal enables IAG to establish a position as a leader in routes from Europe to Latin America and the Caribbean.

The acquisition will allow IAG’s hub in Madrid to be transformed into “a true rival” to Europe’s four largest hubs of Amsterdam, Frankfurt, London Heathrow and Paris Charles De Gaulle.

IAG already owns Spanish flag carrier Iberia and low-cost carrier Vueling.

Air Europa serves 69 destinations, including European and long-haul routes to Latin America, the US, Caribbean and North Africa.

The carrier generated revenue of €2.1 billion and an operating profit of €100 million last year and carried 11.8 million passengers with a fleet of 66 aircraft. Pre-tax profits attributable to Air Europa for 2018 were €67 million.

The deal is set to be completed in the second half of 2020 subject to relevant approvals.

The Air Europa brand will initially be retained and the company will remain as a standalone profit centre within Iberia run by Iberia CEO Luis Gallego.

IAG chief executive Willie Walsh said: “Acquiring Air Europa would add a new competitive, cost effective airline to IAG, consolidating Madrid as a leading European hub and resulting in IAG achieving South Atlantic leadership, therefore generating additional financial value for our shareholders.

“IAG has a strong track record of successful acquisitions, most recently with the acquisition of Aer Lingus in 2015 and we are convinced Air Europa presents a strong strategic fit for the group.”

Javier Hidalgo, chief executive of Air Europa parent company Globalia, said:  “For Globalia, the incorporation of Air Europa to IAG implies the strengthening of the company’s present and future that will maintain the path followed by Air Europa in the last years.

“We are convinced that the incorporation of Air Europa to a group such as IAG, who over all these years has demonstrated its support to the development of airlines within the group and the Madrid hub, will be a success”.

Gallego added: “This is of strategic importance for the Madrid hub, which in recent years has lagged behind other European hubs.

“Following this agreement, Madrid will be able to compete with other European hubs on equal terms with a better position on Europe to Latin America routes and the possibility to become a gateway between Asia and Latin America.”

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