According to the online newspaper El Confidencial, Iberia and IAG have agreed to pay Globalia 500 million euros for Air Europa.
Originally valued at 1,000 million euros, the Mallorca-based airline has now been valued at 50% as account has been taken of the 475 million euro loan from the SEPI Sociedad Estatal de Participaciones Industriales, the state holding company.
Iberia had proposed acquiring Air Europa from the Hidalgo family, which owns Globalia, in exchange for shares. There will instead now be a cash payment but not until 2026, which will be the five-year deadline for the Hidalgos to have repaid the 475 million; the agreement is still subject to Brussels approval. In opting for a cash payment, Iberia is setting a condition, which is that SEPI withdraws its intention to place two directors on the Air Europa board. Iberia wants to have a free hand to restructure Air Europa, and that will almost certainly mean redundancies.
While the issue with the directors poses a complication, a further one arises from the ability of Air Europa (Globalia) to meet the loan repayment terms. El País has reported that the airline's profit in 2019 was 27.7 million euros. This year has of course been a different matter, and El País suggests that it could take up to twenty years to complete the repayment.