UK airline giant IAG agrees to buy Spain’s Air Europa

British Airways owner IAG agreed to buy Spain’s Air Europa for 1.0 billion euros to expand routes to Latin America and the Caribbean, boosting Madrid as a key hub.

The London-listed company said in a statement that it has signed a transaction agreement with Air Europa owner Globalia in a deal worth the equivalent of $1.2 billion that it aims to complete in the second half of next year.

IAG added that Air Europa will complement existing Spanish divisions Iberia and Vueling — and help Madrid take on the four largest air hubs in Europe, Amsterdam, Frankfurt, London Heathrow and Paris Charles De Gaulle.

The deal, which is subject to regulatory approvals, will further expand IAG’s portfolio that also includes Ireland’s Aer Lingus and low-cost European carrier Level.

The British company added that it will fund the deal with debt, and anticipates that the transaction will generate significant savings in terms of costs and sales.