IAG Shares Soar After Dropping Air Europa Takeover
IAG shares surged after the British Airways owner abandoned its plan to fully acquire Spain’s Air Europa and reinstated its dividend, signaling strong financial performance and strategic focus.
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Shares of International Airlines Group (IAG), the parent company of British Airways, soared on Friday after the company announced it would abandon its plan to fully acquire Spain’s Air Europa and resume dividend payments.
IAG, which already owns 20% of Air Europa, had intended to purchase the remaining 80% from Globalia. However, the company decided to pull out of the deal, citing an unfavorable regulatory environment. IAG CEO Luis Gallego emphasized that the decision was in the best interests of shareholders and reaffirmed the company’s commitment to its strategic goals, particularly enhancing its operations at the Madrid hub.
As a result of the termination, IAG will pay Globalia a break fee of €50 million (£42.5 million). Despite this, analysts at JPM believe the company could save around €350 million in post-breakup fees.
The news of the scrapped takeover boosted IAG shares by 7.5% to 172.1p, pushing them into positive territory over the past year. Adding to the positive momentum, IAG reinstated its dividend at €0.03 per share, marking its first payout since the pandemic began.
IAG reported an operating profit of €1.24 billion, surpassing market expectations of €1.08 billion, driven by strong travel demand in its primary North Atlantic market. Gallego expressed confidence in the company’s performance and strategy, highlighting robust demand in core markets such as North Atlantic, Latin America, and intra-Europe.
Market analyst Mark Crouch from eToro described the results as a significant recovery from the pandemic’s impact but cautioned about potential challenges, including air traffic controller strikes, economic slowdowns, and rising tensions in the Middle East that could affect oil prices and fuel costs.
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