MADRID -Luis Gallego, the chief executive of British Airways’ parent IAG, said on Wednesday a deal over the protracted acquisition of Spanish low-cost airline Air Europa may take at least 18 months.
“We have to decide on a calendar to take 100%, but I think it would take minimum 18 months,” Gallego said during an event called ‘Wake Up Spain,’ held in Madrid. He didn’t detail how much IAG would eventually pay for Air Europa.
The company will also have to secure antitrust approvals in several countries, Gallego said.
IAG announced in late 2019 it had agreed to buy its smaller rival for 1 billion euros ($1.1 billion) with the goal of building a big hub in Madrid, but the COVID pandemic and antitrust concerns derailed the merger.
As the pandemic tipped the airline industry into crisis, hitting Air Europa particularly hard, shareholders in both companies agreed to cut the deal’s price tag to 500 million euros.
Spain’s government approved a 475 million euro rescue package for Air Europa in November 2020, a part of which could be converted into equity, meaning the Spanish government has also been involved in the talks since then.
Negotiations had all but ground to a halt until last month when IAG agreed to grant Air Europa a 100 million euro loan convertible into a 20% stake.
Separately, Gallego said the company expected to operate at 90%-95% of its pre-pandemic levels this summer.
($1 = 0.9159 euros)
(Reporting by Inti Landauro and Christina ThykjaerEditing by Emma Pinedo and Mark Potter)
