IAG boss says he is looking for alternatives to complete purchase of Air Europa.

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Airline group IAG is set to cancel its takeover of Air Europa after European regulators indicated they would not allow it to go through without further concessions, though CEO Luis Gallego hasn’t given up hope of some sort of tie-up.

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British Airways and Iberia owner IAG’s proposed acquisition from privately held Spanish company Globalia was designed to help the group’s Madrid hub to compete more effectively against its European rivals. Air Europa provides connections to Latin America as well as serving destinations in Europe, Reuters reported.

After IAG finance chief Stephen Gunning announced that the group was in advanced negotiations to cancel the acquisition, Chief Executive Luis Gallego said the COVID-19 pandemic meant the deal no longer worked but that IAG was assessing whether there were other options for a tie-up.

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“Air Europa, let’s see if finally we can find a way to do it,” he told the online Capa Live conference.

“We are not going to continue with the current structure, we are trying to have a new structure that (will) allow this deal to happen.”

While most observers expected IAG to pull the deal once the pandemic struck, it instead agreed to cut the price in half to 500 million euros ($563.6 million) and negotiated to defer payments for six years.

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