Lufthansa Group and Air France-KLM have halted talks to acquire a stake in Air Europa (UX, Palma de Mallorca) due to a disagreement over the price with the Hidalgo family, the carrier's majority owners through Globalia. According to the Spanish newspaper El Confidencial, the two airline groups rejected the Hidalgos' EUR1 billion euro (USD1.13 billion) valuation of Air Europa.
Both Lufthansa Group and Air France-KLM were reportedly interested in purchasing a 25% shareholding in the airline, although the Franco-Dutch company was previously believed to be negotiating for a 51% stake. Hainan Airlines (HU, Haikou) and an unnamed Middle Eastern fund were also reportedly interested in taking over Air Europa, but it is not known whether the high price tag also deterred these other potential investors.
ch-aviation asked Air Europa for comment but it was not immediately available. Air France-KLM and Lufthansa Group declined to comment on the matter.
Globalia justified the valuation based on Air Europa's performance last year, with the carrier recording EUR116 million (USD131 million) gross profit on revenues of EUR2.9 billion (USD3.3 billion). Despite the carrier's improving financial situation, it is still burdened by substantial debt.
However, it remains mired in debts. Air Europa took a EUR475 million (USD537 million) state-backed loan from Spain’s sovereign wealth fund (Sociedad Estatal de Participaciones Industriales - SEPI) in 2020, allowing it to stay afloat during COVID. This debt is due in 2026, but the government has considered rescheduling the loan repayments for Air Europa and other carriers over fears they may not be able to repay so soon.
The carrier also took a EUR141 million (USD159 million) loan from Spain’s state-run credit bank (Instituto de Crédito Oficial - ICO) in 2020 but has since repaid this debt, El Confidencial reported on May 13. Air Europa had mulled repaying it in the second half of 2024 but scrapped the plans due to the high interest.
Investigation demands
The government's decision to bail out Air Europa remains controversial. The vice president of the European People's Party, Dolors Montserrat, has urged the European Commission to launch an investigation into Air Europa's state aid due to fears of "political favouritism and a conflict of interest" among the highest government officials. She accused them of illegal political interference that allowed the carrier to secure the SEPI loan.
ch-aviation asked the European Commission whether it plans to probe Air Europa and the Spanish government over Montserrat's accusations, but it declined to comment.
In October 2020, SEPI requested the bailout sum of EUR475 million to be reduced by EUR35 million (USD40 million), corresponding to a dividend the Hidalgo family received in February of that year. However, the proposal did not go through and the airline received the full amount, according to the Spanish daily Vozpópuli.
Globalia holds an 80% stake in Air Europa. The rest is owned by IAG International Airlines Group, which previously attempted to take over the airline but scrapped the plans after the European Commission mandated remedies to competitors.
