It is the third largest airline in Spain after Iberia and Vueling, both of which are already owned by IAG, together with British Airways, Aer Lingus and Level.
The group intends to transform its Madrid hub into a ‘true rival’ to Europe’s four largest hubs currently – Amsterdam Schiphol, Frankfurt, London Heathrow and Paris Charles De Gaulle.
The deal, which is expected to complete in the second half of 2020, will also re-establish its market dominance on routes from Europe to Latin American and the Caribbean.
Air Europa currently operates domestic and international flights in 69 destinations, including frequent services between London Gatwick and its Madrid hub.
The Air Europa brand ‘will initially be retained’ and will operate as a standalone profit centre within Iberia.
It has confirmed it will exit the SkyTeam airline alliance following the takeover. The airline could join BA and Iberia in the oneworld alliance, conveniently plugging a gap created by LATAM’s impending departure from the group.
“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,” says Willie Walsh, Chief Executive of IAG.
“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.”