Aer Lingus, British Airways and Iberia owner International Airlines Group (IAG) has agreed to buy Spain's Air Europa for €500 million with payment deferred until 2026, website El Confidencial has reported.
IAG, its Spanish unit Iberia and Air Europa owner Globalia declined to comment on the El Confidencial report, which cited unnamed sources saying that the deal was at half the original offer price.
After originally agreeing to buy Air Europa for €1 billion in November of 2019, IAG has been pushing to cut the price as the coronavirus pandemic threw the airline industry into crisis.
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International travel restrictions have brought the global transport sector to a grinding halt, pushing several airlines to rely on state aid.
For the sale to proceed, the Spanish government must waive its right to appoint two directors to Air Europa's board, which is one of the conditions of a €475 million state aid package that was approved last month.
Spanish brokers JB Capital viewed this potential new deal as largely positive due to the payment deferral.
"We saw a potential cash outflow for IAG in the following months as a bigger risk for this transaction, given the current uncertainty in the aviation industry," JB Capital said.
El Confidencial said that the reason for the deferral was to give Air Europa time to repay the state aid package.
Spain's state-owned industrial holding company SEPI, which provided the funds for Air Europa, declined to comment.
Potential Agreement "Might Be Viewed Negatively By The Market"
JB Capital also said, however, that the potential agreement "might be viewed negatively by the market" as the sum reportedly to be paid would be above the €350 million to €400 million previously reported by the same news outlet.