New Scenario in Air Europa Bid: Air France-KLM Withdraws as Lufthansa Remains in "Very Difficult" Negotiations
The future of Air Europa now hangs in the balance, resting on tense and "very difficult" negotiations with Lufthansa. The carrier's path forward narrowed considerably after Air France-KLM exited the race to acquire the Spanish airline.
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The European aviation consolidation chessboard was completely reset this week. The Air France-KLM group formally withdrew its offer to acquire a stake in Air Europa, while its main competitor, the German group Lufthansa, confirmed it remains in the race, although it warns of the enormous complexity of the negotiations.
The Franco-Dutch conglomerate's decision was communicated by its CEO, Benjamin Smith, who stated during the group's financial results presentation that "we have stopped the discussion." Industry sources indicate that the withdrawal is due to an insurmountable disagreement on the airline's valuation with its parent company, Globalia, owned by the Hidalgo family.
The exit of Air France-KLM transfers all the pressure to Lufthansa, which now positions itself as the strongest European suitor. However, optimism is muted. Lufthansa's CEO, Carsten Spohr, described the conversations with Globalia as "very difficult," casting doubt on a successful outcome. Spohr admitted that he cannot guarantee whether the process will succeed, which highlights the existence of weighty obstacles at the negotiating table.
Strategy, Debt, and the Value of Routes
The interest in Air Europa is based on its valuable route network to Latin America and its position in the Madrid-Barajas hub. For Lufthansa, the acquisition represents an opportunity to expand its dominance in Southern Europe, a strategy it is already executing with the purchase of Italy's ITA Airways.
For Air Europa, finding a partner is a pressing need. The company is seeking capital to strengthen its operations and, crucially, to repay a €475 million state bailout it received during the health crisis.
Who is competing for Air Europa now? Following the withdrawal of Air France-KLM, the main interested parties are the German group Lufthansa and Turkish Airlines. Lufthansa confirmed it is still negotiating, although the talks are complex.
In this complex scenario, Turkish Airlines remains the other major international competitor. Furthermore, International Airlines Group (IAG), Iberia's parent company, is closely watching the situation from its position as a minority shareholder, holding 20% of Air Europa. The future of the Spanish airline and the configuration of alliances across the Atlantic depend on the outcome of this tense bidding process.
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