The planned sale of the Spanish airline Air Europa is facing difficulties due to the recent decline in the share prices of potential buyers. Both Lufthansa and Air France-KLM showed interest in a takeover earlier this year. However, the deteriorating market conditions now threaten to complicate the deal.
Lufthansa experienced a strong increase in its shares’ price at the beginning of the year. It grew from €5.56 to €8.06 in March. However, share prices are already down currently back to €6.13 a share. A similar trend is visible for Air France-KLM. International trade tensions, partly caused by the protectionist policies of the United States, are also negatively impacting sentiment in the aviation sector.
Air Europa is for eighty percent owned by the Hidalgo family through their company Globalia. The remaining twenty percentile is in ownership of IAG, the parent company of British Airways and Iberia. Globalia is planning to sell 25% of its shares through a capital increase. At the same time, Air Europa still needs to repay €475 million in COVID-19 aid to the Spanish state holding company Sepi, with whom recent discussions have taken place.
According to Spanish newspaper El Confidencial, there is concern within the company about the decreased stock prices of Lufthansa and Air France-KLM. If either of these parties intends to pay the bill (partially) by means of their own shares, it could lead to a lower valuation of Air Europa. This is especially true regarding the general pressure on the aviation sector.
Preference
Lufthansa, reportedly the Hidalgo family’s preferred buyer, is said to have made an offer of just under €240 million. Air France-KLM initially made a bid of €300 million for 51% of the shares of Air Europa, including the assumption its debt. However, the Hidalgo family does not want to relinquish a majority stake. A second bid from the Franco-Dutch group is apparently now below €240 million. The outcome of the discussions currently seems uncertain.