Integration has greater strategic relevance due to the implementation of the Brexit

Iberia plans to increase passenger traffic by 50% with the integration of Air Europa

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Updated: 21/01/21

Iberia has sealed the purchase of Air Europa, perhaps the most relevant corporate operation in the history of the airline, although behind its incorporation into the IAG holding company. The context could not have been more complicated with the terrible effects of the covid pandemic on the air business and the launch of Brexit.

The acquisition and integration of Air Europa into Iberia changes the future figures of what was once Spain's flagship airline, and also the holding company of which it is part, along with Bristish Airways and Air Lingus, among others. It will also have an important role in Barajas airport and in the creation of a large airport hub formed by Madrid and Barcelona, as the main players foresee.

Now the comparisons with the previous year are faced with the exceptional characteristics of 2020, which it seems will not go back to 2021. However, IAG's projections indicate that the integration of Air Europa will boost the size of Iberia by 50% and the holding by 10% in terms of passenger traffic. They estimate that growth will be based on increased network opportunities and cost reductions. This will lead Iberia to consolidate its leadership in the South Atlantic.

Based on the fact that the two airlines together have a 65% share of Barajas' passenger traffic, IAG expects the capacity of this airport to be close to Europe's leaders: Amsterdam, Frankfurt, London Heathrow and Paris Charles De Gaulle. However, the operation will have to pass through the filter of the competition authorities.

The transaction has been closed due to the prior provision of public funds amounting to 475 million. This injection, led by Sociedad Estatal de Participaciones Industriales (SEPI) - ?240 million in a participative credit - also meant that this entity entered the board with two representatives, which was not to Iberia's liking. But the strategic importance of the transaction is clear, especially in the Brexit scenario.

Along these lines, the CEO of Iberia, Javier Sánchez-Prieto, stated that the strategic sense "to reinforce the competitiveness of the Madrid hub in a global scenario. It will benefit consumers and the incorporation of Air Europa into the Iberia Group will improve the company's viability, benefiting both Iberia and Air Europa employees".