Iberia negotiates with the Government a restructuring of Air Europa’s debt




Two years after the announcement of the purchase of Air Europa by Iberia, the acquisition remains unfinished. In fact, it is more complicated than ever. The rescue of the airline by the Government, the demands of Brussels and the impact of the coronavirus on the company hinder an operation that promised to turn Barajas into an international ‘hub’.

The CEO of IAG, Luis Gallego, this Friday was “pessimistic” regarding the closure of the operation. “We continue talking with the Government and also with Globalia, in addition to negotiating the conditions with Brussels. All that is put in a cocktail shaker and see what comes out, ”the manager explained to the media after the presentation of the group’s results.

Iberia defends that the ‘remedies’ it has presented to Brussels to unblock the situation are “very generous” and hopes that the European Commission will accept them. Brussels sees competition problems if the union closes, especially on certain routes to the Caribbean.

But competition concerns are not the only ones threatening the operation. As Gallego has defended, Air Europa is today a “very indebted” company and it will be necessary to “repair the balance because now there is a technical bankruptcy.” In this sense, the CEO of IAG has stated that they are holding open negotiations with the Government to “Rebalance” the agreements reached during the rescue of the Globalia airline, estimated at 475 million. The intention is to restructure the group’s debt. “Air Europa could need a recapitalization in the coming months,” Gallego has warned.

There are also direct contacts with the airline itself. Iberia has already lowered the price of the operation from one thousand to 500 million, but now it is seeking a new discount in the face of the rapid deterioration of its competitor.

The IAG executive has also confirmed that the clause for which Iberia will have to pay 40 million euros is still in force if the operation does not finally come to fruition. “We continue to bet on the operation. We can’t do more, ”Gallego explained.

Regarding the possibility of looking for alternatives to the purchase, Gallego has assured that «Always evaluates the possible companies that could contribute to the development of the group». Even so, in the short term, the manager defends that the firm’s first option is to recover and “pay the debt” with which it has come out of the coronavirus.

The holding company, which includes Iberia, British Airways (BA), Vueling and Aer Lingus, recorded losses after taxes of 2,622 million euros during the first nine months of this year, which represents a decrease of 53% compared to the ‘ Red numbers’ of 5,576 million euros that was scored a year earlier due to travel restrictions derived from the Covid-19 health crisis.

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