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Air France-KLM is in talks to acquire Europa Airlines.

European M&A and Investment 2025-03-20 15:56:49

recently,The French and Dutch joint aviation holding company Air France-KLM has announced that it is in negotiations with the Spanish airline Air Europa regarding an equity acquisition.Air France-KLM CEO Ben Smith confirmed the news in an interview with the media, stating that they have met with Air Europa and are beginning to consider acquiring shares.

Image source: Airliners.de

Smith clearly stated,lawAir France-KLM's goal is to fully integrate Air Europa into its group, and a "clear path" is a "prerequisite" for acquiring a majority stake.He also added that Air France-KLM hopes to achieve control. Previously, Air France-KLM had engaged in commercial cooperation with Europa Airlines under the SkyTeam framework, but there was no mention of plans to acquire shares.

Smith pointed out that although there is no clear acquisition ratio at present, for Air France-KLM, obtaining a majority stake is the key to successful negotiations. If the negotiations go smoothly,Air France-KLM may reach a similar equity structure to that of another airline, Scandinavian Airlines (SAS), within two years.Since 2023, Air France-KLM has held nearly 20% of SAS's shares.

The valuation of Europa Airways is approximately 1 billion euros., however, IAG (International Airlines Group), the parent company of Aerolíneas Europa, has another subsidiary, Iberia, which received a total amount during the pandemic475 million euros in government loansTo repay these loans, Europa Airlines is currently seeking investors to join, particularly shareholders who can help it through its financial difficulties.

Most of the shares of Air Europa are held by the Spanish tourism group Globalia, with an additional 20% held by IAG.IAG had intended to acquire Air Europa, but due to the European Commission's concerns that the acquisition could lead to excessive market concentration, it ultimately failed to succeed.

In addition, German aviation giant Lufthansa has also expressed interest in acquiring a minority stake in Air Europa.Despite this, Air France-KLM believes that compared to Lufthansa, its smaller market share in Southern Europe might make it easier to obtain regulatory approval. EU regulators typically take a cautious approach to large-scale mergers and acquisitions in the aviation industry, concerned that such deals could lead to higher ticket prices and thus impact consumer interests.

Smith also pointed out,Air France-KLM's geographic expansion will focus on the southern European market.But this expansion should not be "at any price." He emphasized that although the group is very interested in further developing in the southern European market, the expansion will still proceed in a reasonable and sustainable manner.

Apart from Europa Airlines,Air France-KLM has also shown interest in the Portuguese airline TAP Air Portugal. The Portuguese government plans to privatize TAP, and other airlines, including Lufthansa and IAG, are also eyeing this opportunity.Smith stated that Air France-KLM is closely monitoring the process and is willing to take action based on market conditions.

Air France-KLM is actively seeking opportunities to enhance its competitiveness in the southern European market and expand its market share in the region through the acquisition of Air Europa. As the acquisition negotiations proceed, the relevant equity ratios and transaction details are still under further discussion. Meanwhile, Air France-KLM has also shown interest in the privatization of TAP Air Portugal, which could be another avenue for its further expansion. Despite facing challenges from EU regulations, Air France-KLM firmly believes that acquiring Air Europa will help strengthen its competitiveness in the European and Latin American markets and provide strong support for the group's future development.

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Air France-KLM is in talks to acquire Europa Airlines.

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