Air France-KLM Targets Spanish Market with Potential Air Europa Deal

Globalia and the Air France-KLM group are in talks to allow the latter to acquire a minority stake in Air Europa, the Spanish airline 80% controlled by the Hidalgo family, according to the Spanish newspaper Expansión. This operation could improve Air Europa’s delicate financial situation and mark the beginning of a deeper future alliance between the two companies, both currently members of the SkyTeam alliance.

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Although no official details have been confirmed, sources from Air France-KLM acknowledged to Expansión that there are «ongoing discussions» and that both companies have identified «a common interest in strengthening their commercial cooperation.» The entry of the Franco-Dutch group could alleviate Air Europa’s financial troubles, which ended 2023 with a negative net worth of 500 million euros.

Air Europa has faced significant challenges since its acquisition by IAG, the parent company of Iberia and British Airways, fell through due to European Union regulatory concerns. The group retains 20% of the airline’s capital.

Opportunity for Air France-KLM

The entry of Air France-KLM could represent a strategic move to strengthen its presence in the Spanish market, particularly at Madrid-Barajas Airport, Air Europa’s main base and a key hub for competition with Iberia. The Franco-Dutch group had already shown interest in the airline in the past, but its efforts were put on hold during IAG’s exclusive negotiations.

Sources from Air France-KLM cited by Expansión emphasized that the failure of IAG’s purchase «opens a new scenario» and highlighted the «long history of commercial partnership» between both groups.

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A challenging moment for all

Although the potential investment by Air France-KLM could ease Air Europa’s situation, both companies face challenges in the current context. According to Expansión, Air France-KLM’s profits have fallen by 68% in the first nine months of the year, contrasting with an 8% increase recorded by IAG during the same period.

Meanwhile, Air Europa’s future remains uncertain. While its CEO, Jesús Nuño de la Rosa, has stated that the company is capable of meeting its financial commitments independently, the Hidalgo family seems determined to divest the airline.

The entry of Air France-KLM could redefine the competitive landscape in Spain and Europe, delivering a significant blow to IAG on its own strategic turf.