Regulatory Hurdles Loom for IAG’s Second Attempt to Acquire Air Europa
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International Airlines Group (IAG), the owner of British Airways, is bracing for a potentially protracted regulatory investigation in Brussels over its second bid to acquire Spanish airline Air Europa. Industry insiders suggest the deal could even be blocked due to fears of increased ticket prices.
IAG, which also owns Spanish flagship carrier Iberia, agreed in February to purchase the remaining 80% of Air Europa for approximately €400 million. The acquisition is aimed at boosting IAG’s presence in the rapidly expanding Latin American market and transforming Madrid into another European hub.
According to the Financial Times, although the proposed deal has yet to be officially submitted for approval in Brussels, sources indicate that regulators are preparing for another lengthy investigation. «This is the second time this merger has been attempted, and it doesn’t look good,» said an individual familiar with the matter. «We didn’t like the first one. It’s going to be worse this time around.»
In 2021, IAG abandoned its initial attempt to acquire Air Europa due to regulatory concerns. IAG is currently the largest airline operator in Spain, while Air Europa ranks third. The original agreement, reached in late 2019 before the pandemic disrupted the airline industry, had IAG paying €1 billion for Air Europa.
As part of their evaluation, regulators will examine the deal’s impact on a route-by-route basis. Brussels authorities are reportedly concerned about the lack of competition on specific routes, according to sources.
However, it is still possible for IAG to offer adequate concessions and evidence that competitors could access vital routes, potentially securing EU approval for the deal. IAG has declined to comment on the matter, and the European Commission has confirmed that the proposed deal has not yet been filed with regulators.
It is worth noting that EU regulators have previously thwarted Ryanair’s efforts to acquire its Irish competitor Aer Lingus, citing concerns that the merger would result in unfair competition on key routes.
Last year, IAG achieved its first annual profit since the onset of the pandemic, as airlines experienced a resurgence of pent-up demand in the post-pandemic period.
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