Iberia's parent company decides to maintain its 20% stake in Air Europa following the entry of Turkish Airlines.

Iberia's parent company, IAG, has made a decision regarding its position in Air Europa, which had been significantly devalued after the Balearic company controlled by the Hidalgo family announced an agreement with Turkish Airlines on August 18th to transfer its 27% stake. To avoid diluting its position, the Spanish-British holding company will ultimately participate in the capital increase through which the Turkish airline will acquire Air Europa and maintain its current 20% stake.

"IAG's stake in Air Europa is purely financial, and therefore the decision to maintain the percentage has also been made based on financial criteria." This is how IAG justified a decision that could also be interpreted as a strategic move, given that Air Europa is positioning itself to be the "Trojan horse" through which Turkish Airlines launches its assault on Barajas Airport. The Turkish company has been very clear about its intentions, which include using the Spanish hub to expand its market share in South America, where it is a secondary player despite being the airline that flies to the most countries in the world.

Thus, IAG will have to wait and see how the alliance between what is currently one of its main rivals and a company that was long on its radar prospers. Specifically, IAG's 20% stake in Air Europa is the result of a failed attempt by the holding company to acquire the company and become the undisputed leader in Latin America. After acquiring that stake in 2022, using a loan that was later converted into shares, in February 2023 IAG signed an agreement with Globalia (owned by the Hidalgo family) that would have given it 80% of Air Europa. However, a year ago, that pact had to be canceled—Iberia had to pay Globalia €50 million as compensation—due to regulatory pressure from Brussels, which imposed tough demands to prevent a monopoly from developing.

It remains to be seen, however, whether Turkish's Air Europa transaction will be successful, as it also needs to receive approval from SEPI, the European Commission, and the government's anti-takeover shield. Specifically, the agreement reached by the Turkish and Spanish companies amounts to €275 million in the form of a loan and another €25 million in the purchase of equity securities.

(THERE WILL BE EXTENSION)