Spain has lost its direct influence in airline group IAG in the midst of its controversial restructuring, after lender Bankia sold its stake in the airline company for EUR€675 million (USD$877 million).
Bankia, bailed out to the tune of EUR€24 billion by the state last year, sold the 12 percent stake on Thursday as part of a recovery plan agreed with the government and the European Union.
International Airlines Group (IAG) was formed in 2011 by the merger of British Airways and Spain’s Iberia.
Losses at the Spanish airline, however, have led IAG to launch a restructuring at Iberia, which includes thousands of lay-offs and sparked strike action earlier this year, in a country where more than a quarter of the workforce are jobless.
“A forced sale like this one tends to have dangerous implications. The (Spanish) government should be able to have a say in its only national airline, which has a major role in the economy,” said Jose Maria Marin, a professor at the state-run National University of Distance Education (UNED).
As a result of the stake sale, the Spanish government – through Bankia – will lose a seat on IAG’s board. However, certain safeguards for Iberia’s business that were put in place at the time of the merger – such as the routes it can fly – remain in place until 2016.
“Spain’s influence in IAG is reducing,” said Cantor Fitzgerald analyst Robin Byde. “Iberia now accounts for around 26 percent of IAG’s capacity… maybe those who said the merger was more of a BA takeover were right.”
The buyers of Bankia’s stake are unknown, though financial sources told Reuters news agency that book-runner Merrill Lynch had sold the 224 million shares to a wide range of investors.
Bankia and IAG said in statements only that the shares had been placed with “institutional investors”.
Last year IAG chief executive Willie Walsh said there was no strategic value in having Bankia as a shareholder and that the group was open to another airline taking Bankia’s stake, though analysts doubted a rival would step in.
There had been speculation Qatar Airways may be interested in the stake but both Walsh and Qatar Air CEO Akbar Al Bakar dismissed the possibility.
MORE TO COME
Iberia has become unprofitable in all markets, including long haul, and its problems are critical, IAG said last week. The Spanish airline reported an operating loss of EUR€202 million in the first quarter.
Staff staged two five-day walkouts in February and March but halted industrial action after IAG reduced the number of lay-offs at the Spanish flag carrier to 3,141.
(Reuters)