Iberia (IB, Madrid Barajas) will acquire 20% of Air Europa (UX, Palma de Mallorca) by the end of 2022, and “the next step is to try to get 100% of the company,” Iberia CEO Javier Sánchez-Prieto said after receiving state approval for parent IAG International Airlines Group’s EUR100 million euro (USD104 million) convertible loan to Air Europa parent Globalia.

The state-run lending institution (Instituto de Crédito Oficial - ICO) and sovereign wealth fund (Sociedad Estatal de Participaciones Industriales - SEPI) gave their blessing to the loan IAG promised Globalia in March to ultimately convert into a 20% stake in the troubled airline. In May, IAG CEO Luis Gallego said he anticipated that the loan would be turned into the shareholding within six months.

The next step is to gain the authorisations of three countries’ competition authorities, Sánchez-Prieto told a news conference in the United States capital on the occasion of the inauguration of a route between Madrid Barajas and Washington Dulles, the Spanish news agency EFE reported.

These authorities are Spain, Germany, and the United Kingdom, to which Air Europa operates and which have now been given six months to provide approval for the loan conversion.

Sánchez-Prieto stressed that the 20% shareholding is a financial investment by Iberia and IAG that will not, for now, give them influence in Air Europa’s management. The idea is, he added, to continue working with Globalia, with the competition authorities, and with SEPI to complete 100% ownership of the company. The chief executive also pledged to recover its own profitability in 2022.

Separately, IAG CEO Luis Gallego said during a business event held by the newspaper Expansion in Alcalá de Henares in Spain last week that the Iberia-Air Europa merger would create a fleet of around 70 long-haul aircraft “like KLM Royal Dutch Airlines at Amsterdam Schiphol” at the capital’s Barajas hub. Such a fleet will bring more destinations around the world to the hub and allow more of a vision towards Asia, “one of the regions that will have the most development in the future,” he prognosed.

IAG (Aer Lingus, British Airways, Iberia, LEVEL, and Vueling Airlines) will achieve around 85% of 2019 capacity this summer season, he said, and in general capacity across the North Atlantic will reach pre-pandemic figures. The group has not been affected by the closure of Russian airspace and the war in Ukraine, he added, as only 8% of its supply is directed to Asia.