Air France-KLM and Lufthansa launch bid for Spanish Air Europa

The Air France-KLM Group and Lufthansa aim for a stake in Spanish airline Air Europa. According to Spanish online media El Confidential, they have each submitted separate bids to enter Air Europa’s capital for 300 million and 240 million euros, respectively.

Air Europa is Spain’s third-largest airline after Iberia and Vueling. The airline also operates at Brussels Airport.

Outstanding capital loan of €475 million

Last year, IAG, the parent company of British Airways, Vueling, and Iberia, wanted to acquire Air Europa. The deal ultimately stalled because regulators were concerned about competition. But now, Air France-KLM and Lufthansa are bidding for a stake.

According to El Confidential, Air France-KLM wants to acquire 51% of Air Europa from its main shareholder, Global’s tourism group, controlled by the Hidalgo family, for 300 million euros.

The Franco-Dutch group, advised by Société Générale, has also committed to take over the debt that Air Europa incurred toward the Spanish state during the Covid-19 crisis.

This state support totaled 475 million euros, of which 240 million was a convertible capital loan with an interest rate close to 9% and 235 million was an ordinary loan with an interest rate of 2%.

Currently, the Hidalgo family owns 80% of Air Europa. If the deal with Air France-KLM occurs, the Hidalgo family would still own 29% –IAG also has a 20% stake. For Air France-KLM, a stake in Air Europa would provide an additional hub to South America, a growing market.

Preference to Lufthansa?

On the other hand, Lufthansa is said to have offered to inject 240 million euros into Air Europa through a 25% capital increase that would allow the airline to repay the loan granted by the Spanish state during the pandemic.

By taking a stake in Air Europa, Lufthansa could increase its presence in key markets such as the Spanish archipelago of the Balearic Islands (Mallorca, Menorca, Ibiza…) and add a hub to Latin America. According to some sources, Air Europa would prioritize talks with Lufthansa.

50 aircraft, 52 destinations

Air France-KLM recently took another 19.9% stake in Scandinavian company SAS and is also interested in Portuguese state-owned airline TAP.

Lufthansa, which also owns the airlines Austrian, Swiss, Eurowing, and Brussels Airlines and is also interested in taking a stake in TAP, signed another agreement a while back with the Italian government for a 41% stake in ITA Airways. In time, it may take complete control of the latter.

Air Europa, with a fleet of about 50 aircraft, operates domestic Spanish flights and European and long-haul routes to Latin America and the Caribbean. Last year, the company carried 12 million passengers on 52 destinations, generating sales of 2.9 billion euros, up 6% from 2023.

The company, founded in 1984, was the first private airline to break Iberia’s monopoly in Spain.