MADRID (Reuters) - The owner of British Airways and Iberia, IAG, has agreed to purchase Air Europa from Spain for EUR 500 million ($613 million) with payment deferred until 2026, El Confidencial website announced.
IAG, its Spanish Iberia subsidiary, and Globalia, the owner of Air Europa, declined to comment on the El Confidencial story on Friday, citing anonymous sources reporting that the contract was half the original offer price on Thursday.
In November 2019, IAG initially agreed to buy Air Europa for EUR 1 billion, but has been pushing to cut the price as the coronavirus pandemic plunged the airline industry into crisis.
The global transport sector has been brought to a grinding halt by international travel restrictions, forcing many airlines to rely on state help.
In order to proceed with the sale, the Spanish Government must waive its right to appoint two directors to the board of directors of Air Europa, one of the conditions of the State aid package of EUR 475 million accepted last month.
Due to the payment deferral, Spanish brokers JB Capital regarded this possible new agreement as mostly optimistic.
"In the following months, given the current uncertainty in the aviation industry, we saw a potential cash outflow for IAG as a greater risk for this transaction," JB Capital said.
The explanation for the deferral was to allow Air Europa time to repay the state aid package, El Confidencial said.
The state-owned industrial holding company SEPI in Spain, which supplied Air Europa with funds, declined to comment.
However, JB Capital also claimed that the proposed deal "might be viewed negatively by the market" since the amount reported to be charged will surpass EUR 350 million to EUR 400 million previously reported by the same news source.