International Airlines Group (IAG) has agreed to make a €100 million seven-year unsecured loan to Air Europa’s owner Globalia, as it continues discussions over a possible takeover.

The parent company of British Airways and Iberia first announced plans to buy Air Europa back in later 2019, but in December last year confirmed that discussions were at an advanced stage to terminate the agreement.

IAG set to terminate Air Europa deal

CEO Luis Gallego said at the time that the group was “assessing other possibilities to continue” with the purchase, and as part of the loan agreement IAG will get “a period of exclusivity of one year while discussions take place”, accompanied by “a right to match any third party offer for the airline in the next three years, together with a right to exit alongside Globalia should it sell Air Europa at any time in the future”.

IAG also has the option to convert the loan into an equity stake of up to 20 per cent in Air Europa.

Commenting on the deal Gallego said:

“We remain convinced about the strategic importance of this deal to the development and competitiveness of Madrid’s hub. Since we started negotiations, the world has changed.

“This agreement will give us time to evaluate with exclusivity alternative structures that may be of interest to both companies and offer significant benefits for their customers, employees and shareholders.”