The Board of International Airlines Group, parent company of British Airways and Iberia, has decided to make a cash tender offer for 100% of the share capital of Barcelona-based low-cost carrier Vueling. Iberia already owns a 45.85% stake in Vueling, acquired in 2009, and IAG expects to pay €113 million for the remaining 54.15%.
Willie Walsh, IAG Chief Executive, said: “With its leading position in Barcelona, European growth strategy and low cost base, Vueling has much to offer IAG. It has significantly increased capacity while remaining profitable, despite the Spanish economic slowdown, and already has extensive commercial arrangements with Iberia. We would plan to retain the current Vueling management team. The airline will also be able to generate some cost and revenue synergies as part of IAG, mainly through joint financing and procurement.”
Vueling carries about 12 million passengers a year and made a pre-tax profit of €14.8 million in 2011. Last month the airline unveiled plans to increase the number of destinations served from Barcelona by 28 to around 100 next summer.
IAG is working on a major restructuring of Iberia, which made an operating loss of €263 million in the first six months of the year. The overhaul is expected to involve as many as 7,000 job cuts. Iberia launched its own low-cost airline, Iberia Express, in March but has been in a year-long conflict with SEPLA, the Spanish pilots union, over pay and conditions. The Spanish Government appointed an arbitrator in a bid to resolve the dispute, which has led to strikes, but the situation is yet to be resolved.
