IAG International Airlines Group has announced it will avoid the dilution of its 20% ownership of Air Europa (UX, Palma de Mallorca) by investing EUR16 million euros (USD16.8 million) in the company.

The Iberia and British Airways parent holding, which attempted to acquire the whole of Air Europa earlier this year, only to be blocked by the European Commission, must invest in the carrier or face equity dilution following the news that Globalia, owner of 80% of the shares in the Spanish airline, said it would inject EUR65 million (USD68.4 million) in an effort to restore profitability and achieve positive cash flow before the end of the year.

In a statement, IAG said it “is taking part in the capital increase to maintain its current stake and its rights as a minority shareholder, thereby avoiding the dilution of said stake,” adding that the decision was taken according to strict financial criteria. Without this investment, the group’s ownership would have reduced to 17%.

IAG was not immediately available for comment to ch-aviation.

The Spanish newspaper El País' subsidiary, Cinco Días, recently reported that the Air France-KLM Group is in pole position to acquire Air Europa in the future.