January 25, 2022 6:06 pm

Iberia is already demanding a new reduction in the price of Air Europa from the Hidalgo

Madrid

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Iberia’s purchase of Air Europa has become a real business puzzle. While Brussels finalizes its decision on the sale, the parties involved work in the shadows to try to overcome all the obstacles of the operation. In addition to waiting for the resolution of the European Commission investigation, which analyzes the impact that the transaction will have on the competition of certain connections, Iberia negotiates with the Government to restructure debt owed by Air Europa and with those responsible for the airline of the Globalia group to set the final price of the acquisition.

All three processes must come to fruition for the operation to become a reality. For this reason, Iberia insists that the purchase Hang on a wire and is pessimistic both in public and in private.

In addition to the demands of Brussels and the Government, the disagreements between the two companies have been added in recent days, since Globalia is reluctant to undertake the price reduction required by the old flag company, which is aware that Air Europa would have a very difficult time surviving if it doesn’t end up in its guts.

The sale closed in November 2019 for one billion euros. But then the coronavirus pandemic broke out, creating a gigantic financial hole in Air Europa’s balance sheet and leading to public rescue. For this reason, Iberia demanded a reduction in the amount and managed to reach an agreement in 2020 with the Hidalgo family, owners of Globalia, so that the purchase would be closed at 500 million. Months later Brussels appeared with a draconian investigation, which has delayed the transaction even more, while Air Europa’s accounts continue to deteriorate.

The company lost 427.7 million euros in 2020, when it was rescued by SEPI with 475 million euros. A public aid that, as ABC has published, has had to be invested almost entirely in maintaining commercial operations. In addition, Air Europa has a debt of about 200 million with the ‘lessors’, companies and funds that own aircraft to which the airline (as does the majority of the airline sector) leases aircraft to adjust its operations.

The jewel in the crown, down

These circumstances have led Iberia to demand a further reduction in the purchase price. The Hidalgo family, however, is reluctant to agree to a new discount, because already last year they agreed to another reduction and still hopes to get some financial benefit from the sale of what has always been the jewel in the crown of the family group . The debt that it maintains with the aforementioned ‘lessors’, in addition, largely conditions the cut that both companies can agree on. Within this particular tug of war, the airline’s founder, Juan José Hidalgo, would have taken command of the negotiations, relegating his son Javier to the background, as published by ‘El Confidencial’. Meanwhile, the airline has returned to the showcase and look for alternatives to Iberia, which was launched for its purchase in 2019 precisely to prevent the company from falling into the hands of Air France and for its strategic value for Spain.

The next few weeks, according to market sources to this newspaper, will be decisive in deciding these endless negotiations (and the rest of the operation) from one side or the other.

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Reference-www.abc.es

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