Iberia has agreed to pay around $400 million for its domestic rival Air Europa, although the timing of the deal would seem to cast further doubt on the projected November date for its own initial public offering (IPO).
The Air Europa acquisition, which is being scrutinised by Spanish competition authorities, is not due to be finalised until year end.
Air Europa president Juan José Hidalgo had earlier stated that his carrier needed to join an alliance to remain viable and had already moved closerto Iberia with the wet-lease of 11 Boeing 737s to the Spanish flag carrier.
Even before the Air Europa deal, analysts believed that the last part of Iberia's privatisation was likely to be delayed and that it may not now take place until February. SEPI, the state-holding company which is to sell off its remaining 54% stake in the airline, has added a further complication with its decision over the disposal of Iberia's valuable 19% holding in the Amadeus reservation system.
The Amadeus stake, valued at $105 million, is to be split off into a separate company. That decision has led to a revaluation of Iberia to $1.82 billion, $55 million lower than the valuation in December 1999 when the core investors paid for their 40% stake.
As it contemplates buying Air Europa, Iberia is adding a further 15 routes, mostly international, to its codeshare agreement with BA.
As the carriers strengthen their co-operation, BA low-cost subsidiary Go has emerged as market leader on routes linking London with Bilbao, Málaga and Alicante. Iberia remains dominant in Madrid and Barcelona.
Source: Airline Business
