IAG to buy Spain's Air Europa for €1bn in hub push
IAG will position Air Europa in the same value-carrier category as Aer Lingus, after agreeing to pay €1bn in cash for the Spanish airline.
It is the first acquisition by IAG since it bought Aer Lingus in 2015 for more than €1.3bn.
IAG, which also owns British Airways, Iberia, Vueling and Level, said the deal to buy Air Europa would cement Madrid's role as a major European hub. Air Europa carried 11 million passengers last year - a record for the group.
"Acquiring Air Europa would add a new competitive, cost- effective airline to IAG, consolidating Madrid as a leading European hub and resulting in IAG achieving south Atlantic leadership, therefore generating additional financial value for our shareholders," said IAG chief executive Willie Walsh.
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Europe's other major air hubs are Amsterdam, Frankfurt, London Heathrow and Paris Charles de Gaulle.
"IAG has a strong track record of successful acquisitions, most recently with the acquisition of Aer Lingus in 2015, and we are convinced Air Europa presents a strong strategic fit for the group," added Mr Walsh.
Air Europa generated revenue of €2.1bn last year.
It is part of Spain's Globalia, which also has interests in hotels, retail and airport ground handling services.