Air Europa sale stalls as Lufthansa Group rejects €1 billion valuation

Key Takeaways

• Air Europa sale stalled due to Hidalgo family’s €1 billion valuation demand rejected by Lufthansa and Air France-KLM.
• Lufthansa and Air France-KLM offer below €240 million for 25% stakes, citing Air Europa’s heavy debt load.
• Spanish government considers rescheduling €475 million state-backed loan repayment to ease Air Europa’s financial pressure.

As of late May 2025, the highly anticipated sale of a stake in Spanish airline Air Europa has come to a sudden halt. The main reason: a sharp disagreement over how much the airline is worth. The majority owners, the Hidalgo family (through their company Globalia), are holding out for a €1 billion valuation—a price that both Lufthansa Group and Air France-KLM have firmly rejected. This standoff has left the future of Air Europa, one of Spain’s most important airlines, hanging in the balance.

Why the Sale Matters: Who’s Involved and What’s at Stake

Air Europa is a key player in European and transatlantic aviation, especially for flights connecting Europe and Latin America. The airline’s Madrid hub is a strategic gateway, making it highly attractive to larger airline groups looking to expand their networks. The main parties involved in the current sale talks are:

• The Hidalgo Family/Globalia: Owns 80% of Air Europa and is seeking to sell a 25% stake.
• Lufthansa Group: Interested in buying a 25% stake, but unwilling to meet the €1 billion valuation.
• Air France-KLM: Initially considered a 51% majority stake, but later reduced its interest to a 25% stake, also at a much lower price.
• Other Interested Parties: Hainan Airlines and a Middle Eastern investment fund have shown interest, but have not made formal offers.
• IAG (International Airlines Group): Already owns 20% of Air Europa after a failed full acquisition attempt.
• Spanish Government: Provided pandemic-era loans to Air Europa and is now considering rescheduling repayment deadlines.

The Valuation Dispute: Why Are Talks Stalled?

The heart of the problem is the valuation. The Hidalgo family insists that Air Europa is worth €1 billion (about $1.13 billion), pointing to the airline’s strong financial performance in 2024. However, both Lufthansa Group and Air France-KLM have made offers that fall far short of this figure:

• Lufthansa Group: Offered less than €240 million for a 25% stake.
  – Air France-KLM: Initially bid €300 million for a 51% stake, but later reduced its offer to below €240 million for a 25% stake.

Both potential buyers argue that the €1 billion price tag is unrealistic, especially given Air Europa’s significant debt burden. According to analysis by VisaVerge.com, industry experts see the Hidalgo family’s valuation as optimistic, even with the airline’s recent rebound.

Air Europa’s Financial Picture: Growth and Debt

To understand the disagreement, it’s important to look at Air Europa’s financial situation:

• 2024 Gross Profit: €116 million ($131 million)
• 2024 Revenues: €2.9 billion ($3.3 billion)
• Passengers Carried in 2024: Over 12 million, with 3.1 million on long-haul routes (91% occupancy rate)
• Projected 2025 Long-Haul Passengers: 3.3 million

Despite these strong numbers, Air Europa is still carrying a heavy debt load:

• €475 million ($537 million) state-backed loan from Spain’s SEPI, due in 2026
• €141 million ($159 million) loan from Spain’s ICO, which has now been repaid

The ability to repay these loans is a major concern for both the Spanish government and potential investors. The government is reportedly considering rescheduling the repayment deadlines to give Air Europa more breathing room.

For more details on Spanish government support for airlines, visit the Spanish Ministry of Transport, Mobility and Urban Agenda.

How Did We Get Here? A Brief History of Air Europa’s Sale Efforts

Air Europa’s search for a strategic partner or new investor began after the COVID-19 pandemic, which hit the airline industry hard. The Spanish government stepped in with large loans to keep Air Europa afloat. As the airline recovered, Globalia began looking for new investors to help pay off the debt and secure the company’s future.

Previous Acquisition Attempt by IAG

IAG, the parent company of British Airways and Iberia, previously tried to buy Air Europa outright. However, the European Commission blocked the deal over concerns that it would reduce competition on Spanish and European routes. Even after IAG offered to divest more than half of Air Europa’s routes, regulators were not convinced. IAG now holds a 20% stake, but is not currently bidding for more.

New Bidders Enter the Scene

With IAG sidelined, Lufthansa Group and Air France-KLM emerged as the main contenders. Both are major European airline groups with global networks. Their interest in Air Europa centers on the Madrid hub, which is seen as a valuable asset for expanding connections between Europe and Latin America.

Other parties, such as Hainan Airlines and a Middle Eastern fund, have expressed interest but have not made formal offers. It’s unclear if the high price demanded by the Hidalgo family has discouraged them from moving forward.

The Sale Process: Step by Step

Here’s how the sale process has unfolded so far:

1. Initial Bids: Air France-KLM and Lufthansa Group submitted offers for minority or majority stakes, including provisions to take on or guarantee Air Europa’s state-backed debts.
2. Valuation Negotiations: The Hidalgo family insisted on a €1 billion valuation, citing record 2024 results.
3. Due Diligence: Both airline groups conducted detailed studies of Air Europa’s operations and finances.
4. Stalemate: Talks stalled as buyers refused to meet the €1 billion price, and sellers refused to lower their expectations.
5. Other Suitors: Hainan Airlines and a Middle Eastern fund expressed interest, but no concrete offers have been reported.
6. Government Involvement: Spanish authorities are considering rescheduling loan repayments to ease financial pressure on Air Europa.

Why the Madrid Hub Is So Important

Air Europa’s Madrid hub is a major draw for potential buyers. It serves as a key gateway for flights between Europe and Latin America, a market that is growing rapidly. For Lufthansa Group and Air France-KLM, gaining a foothold in Madrid would allow them to compete more effectively with IAG, which already has a strong presence in Spain through Iberia.

The Madrid hub also offers valuable slots and connections for domestic and European flights, making it a strategic asset for any airline group looking to expand its network.

Regulatory and Market Challenges

The stalled sale talks highlight several broader challenges facing the European airline industry:

• Regulatory Scrutiny: The European Commission’s decision to block IAG’s full acquisition of Air Europa set a precedent for close scrutiny of any future deals. Regulators are especially concerned about maintaining competition on key routes.
• Market Conditions: Recent declines in airline share prices and ongoing global trade tensions have made potential buyers more cautious. This has affected how much they are willing to pay for new acquisitions.
• Debt Burden: Air Europa’s large state-backed loans are a significant risk for any buyer. The Spanish government’s willingness to reschedule repayments could make the airline more attractive, but it also signals ongoing financial uncertainty.

What Industry Analysts Are Saying

Industry analysts agree that the Hidalgo family’s €1 billion valuation is ambitious. While Air Europa’s 2024 performance was strong, the airline’s debt and the uncertain market environment make such a high price difficult to justify.

• Strategic Value: Air Europa’s long-haul network and Madrid hub are seen as highly valuable assets.
• Financial Risks: The debt burden and the need for government support are major concerns for buyers.
• Competition: Any sale will be closely watched by regulators to ensure that competition is not reduced, especially on routes between Spain and Latin America.

What Happens Next? Possible Scenarios

With talks currently stalled, several outcomes are possible:

• New Bidders Emerge: The Hidalgo family may seek out new buyers, possibly from outside Europe, if Lufthansa Group and Air France-KLM remain unwilling to meet their price.
• Valuation Adjusted: If financial pressures mount, the sellers may be forced to lower their valuation expectations.
• Loan Rescheduling: The Spanish government’s decision on loan repayment schedules could give Air Europa more time to find a buyer or stabilize its finances.
• Industry Consolidation: If Air Europa remains unsold, attention may shift to other targets, such as TAP Air Portugal, as major airline groups look for ways to expand their networks.

Practical Implications for Travelers, Employees, and the Market

The outcome of the sale will have real-world effects on several groups:

• Travelers: If Air Europa is acquired by a larger airline group, passengers could see more route options and better connections, especially for flights between Europe and Latin America. However, reduced competition could also lead to higher fares on some routes.
• Employees: The uncertainty around the sale creates anxiety for Air Europa’s staff. A successful sale could bring new investment and job security, but failed talks might lead to cost-cutting or restructuring.
• Spanish Aviation Sector: The sale’s outcome will influence the competitive landscape in Spain and across Europe. A strong, well-financed Air Europa is important for maintaining healthy competition and service quality.
• Government and Taxpayers: The Spanish government’s loans to Air Europa are ultimately backed by taxpayers. Ensuring the airline’s ability to repay these loans is a key concern for policymakers.

Summary Table: Key Sale Details

Official Resources

For those seeking more information or considering travel or business with Air Europa, the following official resources are available:

• Air Europa Official Website
• Globalia (Parent Company)
• Spanish Ministry of Transport, Mobility and Urban Agenda
• Sociedad Estatal de Participaciones Industriales (SEPI)

Conclusion: What to Watch For

The stalled sale of Air Europa is a high-stakes drama with far-reaching consequences. The disagreement over valuation between the Hidalgo family and potential buyers like Lufthansa Group and Air France-KLM has left the airline’s future uncertain. The outcome will affect not only Air Europa’s employees and passengers, but also the broader Spanish and European aviation markets.

As the situation develops, key factors to watch include:

• Whether the Hidalgo family lowers their valuation expectations
• If new bidders enter the process
• How the Spanish government handles loan repayments
• Potential regulatory hurdles for any future deal

For now, Air Europa remains in a holding pattern. The next steps taken by the owners, potential buyers, and the Spanish government will shape the future of one of Spain’s most important airlines. Travelers, employees, and industry watchers alike should stay tuned for further updates as this story continues to unfold.

If you are considering travel or business with Air Europa, keep an eye on official announcements and government resources for the latest information. The outcome of these negotiations could have a direct impact on routes, fares, and service quality in the months and years ahead.

Learn Today

Valuation → An estimated worth of a company used to determine sale price in investment deals.
Stake → The percentage of ownership interest an investor holds in a company or asset.
State-backed loan → A loan guaranteed or supported by a government entity to aid companies financially.
Due diligence → A thorough review of a company’s financial and operational details before investment.
Madrid hub → Central airport in Madrid serving as main connection point for Air Europa flights.

This Article in a Nutshell

Air Europa’s sale is stalled as Hidalgo family demands €1 billion valuation. Potential buyers Lufthansa and Air France-KLM reject offers below €240 million, citing debt concerns and market risks. Spanish government may reschedule loans to aid Air Europa, a key Madrid hub airline linking Europe and Latin America.
— By VisaVerge.com

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