The Anglo-Spanish group said it has agreed to pay €500mln to Spain’s Globalia, down from the previous equity value of €1bn agreed in late 2019, and payment will be deferred until the sixth anniversary of the deal’s completion.
First, however, IAG’s Iberia airline must agree on the terms of financial support to be provided by the Spanish government.
If those talks are concluded satisfactorily, and approval is given by the European Commission, the purchase is expected to complete in the second half of 2021.
“The board of IAG continues to believe that the acquisition remains strategically important for the future of IAG and Iberia and positions the group to benefit from growth opportunities as the industry emerges from the unprecedented impact of the COVID-19 crisis,” the FTSE 100 company said in a statement.
With minimal cash outflow in 2021 and net cash flows expected to be positive until at least the repayment of the loan from SEPI in 2026, the deal is expected to immediately boost earnings and, IAG reckons, would transform Madrid into “a true rival to Amsterdam, Frankfurt and Paris Charles de Gaulle”.
Luis Gallego, IAG's chief executive, said: "Both Iberia and IAG are demonstrating their resilience to face the deepest crisis in aviation's history. Being part of a large group is the best guarantee to overcome current market challenges which will also benefit Air Europa once the transaction is completed.”
Javier Hidalgo, Globalia's chief executive, added: “This transaction is a great effort by all of us and is the best way to recover tourism, transport in Spain and the Madrid hub.”