Vueling for IAG?

British Airways and Iberia owner IAG has offered to buy the balance of shares in low-cost airline Vueling in a bid to shake-up the Spanish short haul business and expand the formula within Europe.  It already owns around 46% of the airline.  BA’s previous attempt to established itself in this market, Go, proved a failure.

Whilst initially formed in 2004, the current Vueling has been shaped by a reverse takeover of Clickair in 2008, that airline created by the current CEO Alex Cruz in 2006.  Vueling has followed much in the path of Clickair using a variety of initiatives including the sale of tickets for connecting flights, including luggage transfer, unheard of in the budget airline community.

Vueling posted a nine-month net profit of €50m last week and has net cash of €406.6m.

The IAG offer is €7 per share  for the 54.15% of Vueling it does not already own.  This represents a premium of about 28% to Vueling's closing price when the bid was made. 

Vueling, now Spain's second largest carrier by passenger numbers, has prospered despite the weak economic climate.  It has benefited from the closure of loss-making Spanair in January this year. www.vueling.com

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