Long-awaited and historic movement in the Spanish air sector. The IAG group has become the second shareholder of Air Europa with the acquisition of 20% of the airline from the Hidalgo family. The operation, announced this morning before the CNMV, responds to the capital swap of the 100 million loan granted last March to the parent company of the airline, Globalia. The holding company that brings together Iberia, British Airways, Vueling and Aer Lingus, takes a significant step towards the intended takeover with the acquisition of 100% of Air Europa, but that milestone will depend on community authorizations. At the moment, 20% is considered a financial stake and does not give Iberia any command over its historic rival. In fact, both companies will continue to compete in a market of maximum complexity due to the blows of the pandemic, inflation and fuel costs. The 100 million that IAG delivered to Globalia, for a period of seven years, served to enable Air Europa to face the current summer season, while giving air to some purchase negotiations that had been complicated by the conditions imposed by the EU Directorate General for Competition. IAG guaranteed itself, with its loan, one year of exclusive negotiation for Air Europa and another two years with the right of first refusal if a competing offer arose. Globalia has even been saved a follow-up right if it decides to sell and IAG will not be interested in matching the offer. The purchasing party must now defend these 100 million already disbursed and another 75 million that it delivered at the beginning of the year to Air Europa: 40 million for breaking the initial acquisition agreement, given the foreseeable refusal of the EC, and 35 million more to avoid litigation and continue negotiating with the Hidalgos. More than a year ahead The complex integration plan of Air Europa in Iberia will foreseeably take more than a year before materializing, according to internal IAG estimates. The financing provided to Globalia obtained the green light from the financiers of Air Europa, endorsed by the ICO, and from Sepi. Competition authorities from Germany and the United Kingdom also gave their approval. But what is coming is a much deeper examination of what it would mean to merge the two large network airlines in Spain. Of course, IAG now starts with the guarantee of having convinced different European competition authorities with this first acquisition. Iberia has already put on the table of the EC a series of concessions to its competitors in the form of routes and slots, but in Competition they were insufficient. With one foot already in the capital of Air Europa, the intention of Gallego and his family continues to be to acquire all the shares, as was stated in an agreement with the Hidalgos in October 2019. At that time Air was valued Europe in 1,000 million euros that would be paid in cash. With the first blows of the pandemic, the Globalia firm needed to borrow 140 million guaranteed by the ICO and, later, a rescue of 470 million from SEPI, which protects the airline. The financial burden is above 700 million before the money that Air Europa owes to aircraft lessors. In fact, Iberia has already renegotiated the acquisition price downwards, up to 500 million in installments plus the debt. And in the last approximation to the operation, 20% has been appraised in the 100 million of the loan to Globalia. Strategic move for Madrid-Barajas IAG and Iberia have insisted for months that the acquisition of Air Europa by a foreign group, such as Air France or Lufthansa, would serve to fragment the Madrid-Barajas hub and benefit airports competitors in Paris, Frankfurt, London or Amsterdam. His candidacy is defended as the only one that adds up to Spain and its connectivity. The sum of the long-haul fleets of Iberia and Air Europa, both competing until now for the Latin American market and somewhat in the United States, would be similar to that of KLM in Amsterdam. The resulting company would still be far from the potential of British Airways in London, Lufthansa in Frankfurt or Air France in Paris. However, this scope would allow Iberia to generate efficiencies on routes to America and increase programming to the East and Asia. With this, Barajas would become what is called a 360-degree hub. The two large Aena airports, Barajas and El Prat, hardly reach between 5% and 7% of their seats directed to Asian markets. There, as Iberia has been arguing, there is a little seasonal tourist with a high level of spending on their trips. Different service points outside Air Europa The president of Iberia, Javier Sánchez-Prieto. Iberia is implementing a new strategic plan, Iberia Next Chapter, in which operating efficiency, cash generation and flexibility are prioritized. It also seeks to make the most of the premium offer and the cargo transport and aircraft maintenance businesses. The objective is to consolidate itself, before the acquisition of Air Europa, as the company of reference in Madrid-Barajas. In fact, the seizure of the historical rival can be read in a defensive key in view of the fact that Air France has tried to take over the Globalia firm. The firm led by Javier Sánchez Prieto operates a network of 153 routes around the world, strengthening its positions in the United States and Latin America after the Covid-19 crisis. In fact, Iberia has begun to pull the results of IAG while British Airways reactivates after the hard break that the pandemic has brought to the British airline sector. With all the meat on the grill, Iberia already exceeds the capacity that it put before the crisis in the US and probes the Asian markets for its return to Tokyo and Shanghai, expected in 2023. While the purchase of Air Europa is being negotiated, other points critical are the management of coverage against fuel volatility, progress in the use of sustainable fuels and fleet renewal. By 2030, Iberia plans to have around twenty A350s, several A321 XLR units, the latter two for long-haul, and a large part of the rejuvenated short- and medium-haul fleet. The digitization of operational and commercial processes, as well as cybersecurity, are other fronts that Iberia is addressing to keep pace with growth. From a financial point of view, investment plans are conditioned by cash generation and debt repayment. Iberia has a horizon of 2025 and 2026 to return more than 800 million credits guaranteed by the ICO, for which a financial plan has already been configured.