International Airlines Group has become the second largest shareholder in Madrid-based airline Air Europa.

Earlier this year IAG made a €100 million seven-year unsecured loan to Air Europa’s owner Globalia, with an option to convert the loan into an equity stake in the carrier, and in a statement the group said:

“Further to the announcement made by International Airlines Group (‘IAG’) on 17 March 2022 relating to the convertible loan to Globalia, IAG announces that it has exercised its option to exchange the Group’s €100 million seven-year unsecured loan to Globalia for a 20 per cent equity stake in Air Europa.”

The parent company of British Airways and Iberia first announced plans to buy Air Europa for €1 billion back in 2019, but a much changed aviation landscape due to the Covid-19 pandemic subsequently resulted in the purchase price being halved to just €500 million in January 2021.

The Competition and Markets Authority subsequently launched an investigation into the proposed takeover, and in December last year IAG confirmed that discussions were at an advanced stage to terminate the agreement.

But in March this year the group’s CEO Luis Gallego said that IAG remained “convinced about the strategic importance of this deal to the development and competitiveness of Madrid’s hub”, and as part of the loan agreement the group has a period of exclusivity of one year as it continues discussions over the possible takeover.

IAG “remains convinced” about Air Europa deal,