Nearly five years ago, the International Airlines Group (parent company of British Airways, Iberia, and others) announced its takeover of the Spanish airline Air Europa. Since then, there has been quite a bit of back and forth.
Initially, the planned acquisition was called off in 2021 amidst the COVID-19 pandemic. However, IAG later acquired a 20% stake in Air Europa and soon after announced an agreement for a full takeover. The acquisition, which would have cost a total of 500 million euros, was intended to strengthen IAG’s position in Spain.
It was anticipated that both parties would have to make concessions to get approval for the takeover. After all, IAG (with Iberia and Vueling) already holds nearly a 60% market share in the Spanish airline market, with Air Europa adding another 15%. Consequently, the European Union’s competition authorities were critical, especially concerning a potential monopoly on routes between Spain and Latin America.
Despite numerous concessions (such as relinquishing slots), IAG has not yet received the green light from the antitrust authorities. And it appears that this will remain the case. With approval not foreseeable, the planned takeover has now been cancelled for the second time. IAG will again pay a penalty of 50 million euros to Globalia (parent company of Air Europa) but will retain its 20% stake in Air Europa.
Thus, Air Europa is likely to remain independent and part of the SkyTeam alliance for now. However, how long this will last is questionable—during the pandemic, Air Europa was on the brink of bankruptcy.
Conclusion
The merger of the two (former) full-service airlines in Spain would undoubtedly have resulted in disadvantages for customers. Therefore, the collapse of the takeover is at least initially welcome. However, it remains to be seen if and how Air Europa will continue.
Source: IAG press release
Cover Picture: Air Europa's Boeing 787-8 Dreamliner, EC-MIH taxiing in Madrid-Barajas Airport in front of Terminal 4, Iberia's home terminal. | © Miklós Budai 2019