The deal is valued at just over $600 million a price slashed in half by the past years travel slump.

Under the amended agreement, the money won't have to be paid until the sixth anniversary off the acquisition.

Air Europa has been supported by state backed loans during the recent travel turmoil.

Over the year I A G had confirmed an intention to buy the airline, but it too was struggling with pinched finances.

The two have re negotiated the deal.

As a result, I A G boss Luis Gallego hopes the tie up will boost its Madrid hub with new services to Latin America.

It's also intended to generate cost savings.

I E G shares were up around 1% in early trade Wednesday.