IAG reviewing planned acquisition of Air Europa, says Iberia CEO

FILE PHOTO: Iberia Chairman and CEO Luis Gallego attends an event in Madrid, Spain, January 19, 2016. REUTERS/Andrea Comas

BARCELONA (Reuters) - International Consolidated Airlines Group ICAG.L is reviewing its planned 1 billion euro (892 million pounds) acquisition of Air Europa because of the harsh economic climate caused by COVID-19, the CEO of IAG-owned Iberia was quoted on Sunday as saying.

There has been speculation that IAG, which also owns British Airways, could look to walk away from the acquisition of Spanish carrier Air Europa, announced last November, or try to negotiate a lower price.

Luis Gallego, CEO of Iberia and due to take over as IAG chairman in September, said in an interview with El Pais newspaper published on Sunday that the deal still made sense but the environment was much more difficult.

“We continue to see the strategic value (of the acquisition). The problem is that we are in a moment of crisis in the aeronautical industry,” Gallego said.

“What we are doing is analysing the viability of that operation in this context, not from the strategic point of view but to see the alternatives we have to carry it out because I do think that strategically it makes perfect sense.”

Gallego added: “We are talking about how we can do this operation given the environment, where companies have trouble surviving.”

Separately, IAG-owned British Airways has reached a deal with its pilots that will see 350 laid off and another 300 put in a ‘pool’ for rehiring when needed, The Sun on Sunday reported.

Reporting by Graham Keeley; Editing by Susan Fenton