Iberia (IB/IBE), which is wholly owned by International Airlines Group (IAG), has reportedly agreed terms to buy Spanish rival Air Europa (UX/AEA) for almost €1bn (approx £889m).
The deal had come under scrutiny after it emerged that IAG was pressing ahead with the acquisition whilst still planning to cut 12,000 jobs from IAG owned British Airways.
Outgoing IAG CEO Willie Walsh defended the deal saying it was being made at Iberia level not IAG level.
The deal would see Iberia take control of all of Air Europa’s shares cementing Madrid as the key Spanish Hub for IAG. The deal is subject to approval by regulators.
Mr 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”
It is understood that the Air Europa brand will remain for the immediate future.
But IAG in the employees in the UK may see the deal as a stab in back with British Airways planning to effectively fire its 42,000 strong workforce with 30,000 being rehired on contracts with lower pay and reduced terms.
Just a few days ago British Airways CEO Alex Cruz told staff that they needed to act quickly and work with Unions to stop IAG burning through £178m in cash per week.
Air Europa connects Spain with Europe, Latin America, North America and Africa with a fleet of 66 aircraft carrying almost 12 million passengers in 2019.