Air Europa is Spain's second biggest airline. | Marco Torres

IAG, the Anglo-Spanish airline company whose subsidiaries include British Airways, Iberia, Vueling and Aer Lingus, has agreed to buy Air Europa from Llucmajor-based travel group Globalia for 1,000 million euros. The acquisition is scheduled to be completed in the second half of 2020.

In the report sent by IAG to Spain's National Securities Market Commission, the company explains that the acquisition would create an operational centre hub in Madrid that will make the airport a "genuine rival" to Europe's four largest hubs - Frankfurt, Heathrow, Paris-Charles de Gaulle and Schiphol. In addition, IAG would become Europe's market leader for Caribbean and Latin American routes, while extracting potential synergies in terms of cost and revenue.

It is envisaged that Air Europa, certainly initially, will continue as a brand and as a separate revenue centre within the group. The IAG CEO, Willie Walsh, says that the acquisition will mean that a "competitive and profitable" airline is added to IAG. Additional shareholder value will be generated through IAG leadership of the south Atlantic routes and through the Madrid becoming a leading European hub.

Globalia's CEO, Javier Hidalgo, believes that the "present and future" of Air Europa will be strengthened and is "convinced" that joining IAG will prove to be a great success.

Air Europa operates flights to 69 destinations in Spain, Europe, northern Africa, the Caribbean, the US and Latin America. The airline's operating profit in 2018 was 100 million euros on a turnover of 2,100 million. Globalia's other interests include the Be Live hotel chain.

Regulators will have to consider the acquisition closely, given that Air Europa, Iberia and Vueling would all be part of the same group. In the event that there isn't regulatory authorisation, IAG will pay 40 million euros.