IAG offering 113m euros for Vueling
From The Telegraph:
International Airlines Group, owner of British Airways and Iberia, has mounted a €113m (£90m) offer to take full control of Spanish low-cost carrier, Vueling, as it looks to restructure its loss-making business in Spain.
The airlines giant already owns 45.85pc of Barcelona-based Vueling, Spain’s second largest domestic carrier, through Iberia. But IAG is offering €7 a share for the remaining stake, which will be acquired through a newly-created vehicle.
A €7-a-share offer would value the 54.15pc IAG doesn’t already own in Vueling at €113m. A deal on those terms would value Vueling at €209.3m, according to data from Reuters.
Analysts believe full ownership of Vueling would allow IAG to accelerate its expansion into the low-cost market in Spain after the roll-out of its low-cost brand, Iberia Express, was complicated by a dispute with pilots union SEPLA.
The Madrid government earlier this year appointed an arbitrator to resolve the conflict, which had led to costly strike action, but the Spanish High Court recently found that the arbitration process was flawed.
Analysts said a full ownership deal would potentially allow IAG to side-step the dispute over Iberia Express and feed its long-haul network through the Vueling business. IAG said Vueling would continue to be operated as a separate business and its chief executive would report directly to IAG boss Willie Walsh.
James Hollins, Investec analyst, said the airlines group could use Vueling’s 59-aircraft fleet “to effectively take a key role in the transformation of IAG’s Spanish short-haul programme, subsuming the nascent Iberia Express operations into its own”.
IAG unveiled the offer ahead of third-quarter results on Friday.
Unions expect the company to announce as many as 7,000 job cuts at Iberia, which made a €263m operating loss in the first half.