Air France-KLM Places Bid for Majority Stake in Air Europa
Air France-KLM has made a takeover bid of 300 million euros to acquire a majority stake in the Spanish airline Air Europa.
Air Europa takeover
According to Spanish online newspaper El Confidencial, the French-Dutch airline group Air France-KLM plans to take over fellow SkyTeam carrier Air Europa and has made a bid to acquire 51% of the company’s shares.
El Confidencial cited unnamed sources with knowledge of the ongoing takeover talks, stating that Air France-KLM is prepared to spend 300 million euros for a majority stake of 51% in Air Europa’s shares.
Air Europa is actively seeking other airlines willing to invest in the company, as it faces substantial debts dating back to the pandemic.
Besides paying 300 million for a 51% stake, Air France-KLM is also willing to take over Air Europa’s 475 million euro debt to the Spanish government.
Ownership
At present, Air Europa is 80% owned by the Spanish family group Globalia, with the remaining 20% of shares held by airline group IAG, the parent company of British Airways, Iberia, Aer Lingus, and Vueling.
The shares that Air France-KLM seeks to acquire are those owned by the Hidalgo family, the owners of Globalia.
This would allow them to realise a profit while retaining a minority stake of 29%.
Minority-stake owner IAG had previously attempted to take over Air Europa but decided to abandon its bid due to regulatory concerns.
Due to EU antitrust regulations and IAG’s ownership of both the Spanish flagship carrier Iberia and low-cost airline Vueling, the group would have been required to surrender a significant number of slots at Spanish airports to its rivals to avoid becoming a monopolist in Spanish aviation, had their takeover bid for Air Europa been approved by regulators in the first place.
Competition
Air France-KLM is facing competition in its bid for a stake in the Spanish airline, as the Lufthansa Group has also expressed interest in Air Europa.
The Lufthansa Group is offering 240 million euros for a 25% stake in Air Europa, with the funds to be used for subscribing to newly issued shares.
The German giants hope this capital injection will directly strengthen Air Europa’s balance sheet by increasing its equity.
South America
As the Spanish domestic aviation market is dominated by low-cost carriers such as Ryanair and Vueling, Air Europa’s main selling point has always been its long-haul route network, particularly to Latin America.
Air Europa serves numerous destinations across Central and South America that are currently underserved by both Air France-KLM and Lufthansa, making it a strategic target for both airline groups.
Due to Spain’s strategic location in south-west Europe, Air Europa’s Madrid hub serves as a natural transatlantic connecting point for passengers travelling to destinations across Latin America.
For the same reasons, Air France-KLM, the Lufthansa Group, and IAG have all shown interest in acquiring TAP Air Portugal as well.
At present, European aviation is experiencing a trend of consolidation among the three main airline groups.
In recent months, Italian flagship carrier ITA Airways has become part of the Lufthansa Group, while SAS Scandinavian Airlines has been taken over by Air France-KLM.
Conclusion
Air France-KLM has submitted a 300 million euro takeover bid for a 51% majority stake in Air Europa and is also willing to take over 475 million euros of the Spanish airline’s debt.
However, Air France-KLM faces competition from the Lufthansa Group, which is offering 240 million euros for a 25% stake in Air Europa.
Both European airline groups hope that acquiring a stake in Air Europa will help them consolidate and expand their presence in transatlantic traffic to Central and South America.
