swiss_global

Thanks, Hannibal Lecter, for sharing this link. In fact, the article suggests that Sepi (i.e. the Spanish Government) will have to restructure their loans to Air Europa, either by converting them into equity or at least by changing their conditions, in particular the duration.

Such a government decision will need approval by the EU. Before the pandemic, it would have been virtually impossible to gain such an approval, but now, with virtually all European airlines being bailed out, this becomes more likely.

Hannibal Lecter

https://elpais-com.translate.goog/ec...&_x_tr_pto=nui

Brussels extends the approval of the operation for another month due to the new allegations and the IAG airline admits that it is more pessimistic about the operation going ahead

the European Commission has decided to postpone the decision to approve the operation for one month after receiving Iberia's new allegations on the 27th to solve competition problems.
In this way, Brussels is given another month of margin, until January 4, 2022, to pronounce on the merger, extending the initial deadline that expired on December 3.
Aware of these problems, the CEO of the IAG group airline, Javier Sánchez-Prieto, admitted yesterday that he was "more pessimistic than before" about the acquisition of the Hidalgo family company. “What do I think about buying Air Europa? I am a little more pessimistic than before because there are competition processes that are focused on standards that do not have such a strategic vision, ”said the president of Iberia at a conference organized by the digital publication Preferente.

KeaneJohn

Reuters reporting IAG in advance talks to cancel Air Europa takeover. Unless they are contractually committed surely you just walk away ?



https://www.reuters.com/markets/deal...on-2021-12-15/

Raffles

IAG will have given binding commitments to do the deal, including payment of a break fee if it pulls out or is blocked, which will need untangling. Remember that Air Europa will have spent £20m+ on advisors and will want that money back for a start.

gw76

Thank goodness. Seemed overly cluttered and unnecessary.

Raffles

The interesting question is whether it was a) extreme arrogance by Willie or b) a belief that they had the Spanish Government in their pocket that encouraged them to do a deal which would have given IAG a 73% share of domestic flights, with no obvious remedies available (since no competitor was in a position to take on any divestments - eg Binter is focused on the Canaries and wouldn't want a chunk of random Spanish domestics with no feed).

alanw

Well it appears they are now trying to get the state to take a part of the deal, which I can't imagine they want to do.

There is more info in this non-wireservice article from the Spanish press (in Spanish): https://elpais.com/economia/2021-12-...ir-europa.html

The breakup fee is 40MM€.

lhrpete

Long history would suggest A.

I certainly never believed this deal would clear the regulators and I'm pleased it hasn't.

I wonder now if Air Europa will move closer to AF/KLM in SkyTeam or who knows, the LH Group may come calling. *A with Air Europa and TAP on the Iberian peninsula would be a strong presence.

alanw

We've been in sore need of a *A option here ever since IB and QR conspired with the Spanish government to bankrupt JK folded.

Hannibal Lecter

Under a new structure under discussion, state-backed coronavirus bailout loans could be converted into a government holding of about 40% in the carrier

According to the sources, IAG could also still acquire a stake in the restructured company, as discussions on Iberia absorbing the airline through a new mechanism have remained open.

While Air Europa and IAG have declined to comment on the allegations, Nadia Calvino, Spain’s deputy prime minister and economy minister, told Bloomberg that the government was not ruling out such an eventuality in order to protect the public interest and added that “at this stage we are exploring all available options.”

Calvino acknowledged that such a proposal may not stand up to European Union antitrust scrutiny.
https://www.ch-aviation.com/portal/news/111652

https://www.bloomberg.com/news/artic...-deal-with-iag

Prospero

Some movement today as IAG agreed a €100 million loan to Globalia (Air Europa’s parent)


IAG statement:

International Airlines Group (“IAG”) and Globalia have reached an agreement under which IAG will make a €100 million seven‐year unsecured loan to Globalia. Subject to any relevant regulatory approvals, IAG will have the option to convert the loan into an up to 20 per cent equity stake in Air Europa.

Luis Gallego, IAG’s chief executive, said:

“We remain convinced about the strategic importance of this deal to the development and competitiveness of Madrid’s hub. Since we started negotiations, the world has changed. This agreement will give us time to evaluate with exclusivity alternative structures that may be of interest to both companies and offer significant benefits for their customers, employees and shareholders.”

The agreement is conditional on Globalia receiving approval from syndicated banks that provided the loan agreement partially guaranteed by the Instituto de Credito Oficial (ICO) and by Sociedad Estatal de Participaciones Industriales (SEPI).

It provides for a period of exclusivity of one year while discussions take place and this is 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.

TedToToe

If my maths are correct, IAG now values Air Europa at €500m!

Hydebear

So the loan has been converted to 20% equity, but with no integration with Iberia what's the benefit ( besides keeping competitors at bay ) ?

https://airinsight.com/iag-swaps-air...percent-stake/

jonas123

It will obviously look to gain a bigger share, seat on the board etc. The ability to remove competition when it gains control will be worth a huge amount if it is approved

Hydebear

Apparently IAG have bought the remaining 80% they didn't own...subject to usual scrutiny. On, off, on, off, on !

https://www.nasdaq.com/articles/iag-...-400-mln-euros