Anglo-Spanish airline holding firm International Airlines Group (IAG) has agreed to buy a 20% stake in Spanish airline Air Europa.

In March, IAG reached an agreement to provide a €100m seven-year unsecured loan to Air Europa’s parent company Globalia.

The deal included an option to convert the loan into a stake of up to 20% in Air Europa.

IAG has currently exercised its option to exchange its loan for a stake acquisition in the Spanish airline. The deal includes one year of exclusivity on negotiations for the Spanish airline.

In a statement delivered in March, IAG CEO Luis Gallego said: “We remain convinced about the strategic importance of this deal to the development and competitiveness of Madrid’s hub. Since we started negotiations, the world has changed.

“This agreement will give us time to evaluate with exclusivity alternative structures that may be of interest to both companies and offer significant benefits for their customers, employees and shareholders.”

In November 2019, Iberia, IAG’s wholly owned subsidiary, unveiled plans to acquire Air Europa.in a deal valued at €1bn. However, in December 2021, the takeover plans were scrapped due to competition concerns.

Based in Llucmajor, Mallorca, Air Europa’s fleet consists of 22 Boeing 787 Dreamliners and 20 Boeing 737 NG aircraft.

The airline operates flights to more than 44 destinations in Spain, Europe, South America, North America, the Caribbean, Morocco and Tunisia.