International Airlines Group (IAG) hopes to have a 20% equity stake in Air Europa within six months by triggering a convertible loan it made to Globalia, the parent company of the Spanish airline.
IAG CEO Luis Gallego said May 6 that the airline group was still awaiting waivers from banks related to the loan. “At the moment that we will have the waiver, then we will execute the loan,” Gallego said. “I think we are going to have the waiver soon, and after that ... in less than six months, we can do the conversion in equity.”
IAG—the parent company of Aer Lingus, British Airways, Iberia, Level and Vueling—agreed in March to make a €100 million ($105 million) seven-year unsecured loan to Globalia, giving IAG the option to convert the loan into an equity stake of up to 20% in Air Europa.
The move was the latest development between the two companies. IAG agreed in 2019 to buy Air Europa, with the aim of helping the airline strengthen Iberia’s Madrid hub, giving it access to more slots at the airport and boosting capacity on the transatlantic network to South America.
However, the COVID-19 pandemic called into question the logic of the deal and, even having managed to secure a lower price for Air Europa, IAG confirmed it was abandoning the deal in December 2021.
Back in March, IAG said the latest agreement with Globalia provided for a period of exclusivity of one year while takeover discussions take place. This was accompanied by a right to match any third-party offer for the airline in the next three years, together with a right to exit alongside Globalia should it sell Air Europa at any time in the future.
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