IAG, the parent company of Iberia and British Airways, agreed to buy the Spanish airline Air Europa for one billion euros in a measure that, it says, will strengthen Madrid’s position as an European Hub.
It will be the third Spanish brand of the airline group, behind the low-cost Vueling airline brand.
In a statement to the stock exchange, IAG said that Air Europa, which operates flights to 69 destinations on 66 aircraft, would increase its presence in the South American transatlantic market and help Madrid compete with Frankfurt, Amsterdam, Paris Charles de Gaulle and London Heathrow
The agreement also means that IAG would dominate the Spanish domestic market. Iberia, Vueling and Air Europa collectively represent 84 percent of national seats, according to the Aviation Center (CAPA).
The Air Europa brand “will initially be retained” and the company will remain an independent unit led by Iberia.
Air Europa passengers may use IAG’s loyalty currency, Avios, the company said. However, the operator will leave Skyteam, the marketing alliance led by Delta and Air France-KLM.
An executive director of Iberia said that is of strategic importance for the center of Madrid, which in recent years has lagged behind other European centers. After this agreement, Madrid will be able to compete with other European centers on equal terms with a better position on the routes from Europe to Latin America and the possibility of becoming a gateway between Asia and Latin America.
Air Europa, privately owned, operates regular national and international flights to 69 destinations, including long distance routes to Latin America, the United States, the Caribbean and North Africa. In 2018, it obtained revenues of 2,100 million euros and an operating profit of 100 million euros.