BA owner to halve £900m offer for its Spanish rival

The owner of British Airways is seeking to halve the price of its planned £900m takeover of a Spanish rival. 

As unions threatened a wave of crippling strikes at BA, parent company IAG was closing in on a deal to reduce the amount it will pay for Air Europa to between £450m and £550m. 

IAG, which also owns Spanish flag carrier and Air Europa rival Iberia, has come under fire for pursuing the deal during the coronavirus crisis. 

The pandemic has pummelled the airline conglomerate’s finances and it has been forced to make sweeping cuts, including axing 12,000 staff at BA. 

Critics say IAG should abandon the deal and use the cash to save jobs. It has also been accused by unions of stitching up the aviation market in Spain because it accepted £900m of Covid-related loans guaranteed by the Spanish state. 

IAG argues the Air Europa takeover will give its existing airlines in the country – Iberia and Vueling – dominance at the country’s largest airport, Madrid, and on routes to South America. Air Europa’s price tag is expected to be lowered to between £550m and £450m. 

The negotiations come as IAG faces strikes at BA. Members of the Unite union have threatened walkouts over plans to cut thousands of jobs and change staff contracts, to protect workers against a ‘fire and rehire’ strategy that will see them lose their jobs if they don’t accept new terms, with lower salaries.

The timing would be crippling for BA, which is trying desperately to restart flights to European destinations. 

And the wrangling with unions comes after BA did a deal with pilots that means fewer of them will be made redundant if the remainder take pay cuts over the next three years. Pilots vote on that tomorrow. 

The influence of IAG’s Spanish arm has become apparent after boss – and former BA chief – Willie Walsh lined up Iberia head Luis Gallego as his successor, to take over in September.