IAG abandons pursuit of Air Europa

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International Consolidated Airlines Group SA (CDI)

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British Airways and Iberia owner IAG said on Thursday that it had terminated its agreement to buy Air Europa as it would not be in the best interests of shareholders "in the current regulatory environment".

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Under the terms of the agreement, IAG - which will continue to hold a 20% minority stake in Air Europa - will pay Globalia €50m as a break fee.

Chief executive Luis Gallego said: "We believe this decision is in the best interests of our shareholders. IAG remains committed to its strategy, including competing effectively from its Madrid hub. This is a strategy which is delivering strong results.

"We will continue to develop our presence in Madrid so that the hub can develop as a rival to Europe's largest hub airports.''