Air France-KLM Makes Offer To Purchase 51% of Spanish Carrier Air Europa

Europe has recently become the center of airline mergers.

The latest takeover bid is happening in Spain, where Air France-KLM has offered €300 million (approximately $327 million) in cash to purchase a 51% stake in Air Europa.

Let’s take a look at what this could mean for the future of European air travel.

Air France-KLM Offers To Buy Majority Stake in Air Europa

Should this offer be accepted, Air France–KLM will have a majority stake in Air Europa.

Air Europa has become attractive to outside investment because of its recent strong financial position and its extensive route network to Latin America and the Caribbean. Air France-KLM would gain access to a healthy network of nonstop long-haul routes from Air Europa’s principal hub in Madrid (MAD) that it does not currently serve nonstop from its other hubs across the European continent, including:

An acquisition from Air France-KLM makes logical sense, as Air Europa is an existing member of the SkyTeam Alliance, meaning the airlines already cooperate. For example, For example, it’s already possible to credit Air Europa flights to Air France-KLM’s Flying Blue loyalty program.

However, this isn’t the only interested party in Air Europa. Germany’s Lufthansa Group, which has just completed its acquisition of Italian flag carrier ITA Airways, is offering to acquire 25% of the Spanish carrier for €240 million (approximately $262 million).

And back in 2019, IAG, Europe’s third major airline group, was actually the first to express interest in acquiring Air Europa. While it did successfully purchase a minority stake in the airline, the COVID-19 pandemic and concerns surrounding competition in Spain (IAG is the parent company of the nation’s flag carrier Iberia), the takeover never materialized.

What Would This Mean for Passengers?

If this Air France-KLM deal were to go through, we don’t anticipate disruptions to the passenger experience. As we said previously, Air Europa is already in the same alliance as Air France and KLM, and we’d likely see a deepening of cooperation between the carriers.

However, we could see an increase in fare prices. As One Mile at a Time notes, Air Europa is currently an independent carrier and thus has to offer competitive prices to entice business from customers who might otherwise book tickets with another carrier. It’s possible we’d see the carrier’s often fantastic business class fares jump in price.

Finally, Air Europa isn’t the only carrier on the Iberian Peninsula getting attention. Both Air France-KLM and the Lufthansa Group have expressed interest in acquiring TAP Air Portugal. However, Portugal’s flag carrier is already a member of the Star Alliance, along with major airlines within the Lufthansa Group.

It would seem to make more sense for Air France-KLM to continue with its acquisition of Air Europa and Lufthansa Group to acquire TAP, which would prevent a major shakeup in the airline industry.

Final Thoughts

It’s no surprise that Air France-KLM is interested in acquiring a majority stake in Air Europa. Thanks to its healthy profits and robust unique route network to the Caribbean and Latin America, the carrier is the third airline to show interest in recent times.

While the offer has yet to be accepted, Air France-KLM’s offer is likely to be more enticing than competitor Lufthansa Group’s.