IAG takeover of Air Europa faces fresh challenges in Brussels
Brussels is preparing to lay out objections to International Airlines Group’s second attempt to buy Spanish carrier Air Europa in a move that signals significant competition obstacles to the deal. IAG, which owns five airlines including British Airways and Spanish flag carrier Iberia, agreed in February last year to buy the 80% of Air Europa it does not already own for about E400m, after abandoning an earlier effort at the height of the pandemic. The European Commission last month opened an in-depth investigation into whether the new deal would harm consumers by stifling competition and is due to decide on whether it meets EU merger rules by June 7. But it is poised to detail objections as early as next month, according to three people with knowledge of the matter, who said such a move would amount to a warning that the transaction faces a veto unless credible concessions are made. Regulators fear the deal will reduce competition on Spanish domestic and international routes, and have been studying whether the merger would make it difficult for rivals to offer their services or have other indirect effects such as raising prices. They are concerned that the remedies discussed so far to enable proper competition are weak because the airlines face only small competitors with no credible rivals on the routes they both fly, two of the people said. Europe’s other two major long-haul airline groups also turned to consolidation as the industry emerged from the disruption of the pandemic. Lufthansa has agreed to take a 41% stake in ITA Airways, the successor company to Italy’s Alitalia, while Air France has taken a 20% stake in struggling Scandinavian airline SAS. Brussels opened an in-depth probe into the Lufthansa deal in January. The EC sees IAG’s new deal to buy Air Europa as even “more problematic” than its first, said two of the people familiar with the matter, because the Spanish target is now in a stronger financial position than during the pandemic. “It’s even worse this time,” said one person with direct knowledge of the probe.<br/>
https://portal.staralliance.com/cms/news/hot-topics/2024-02-23/oneworld/iag-takeover-of-air-europa-faces-fresh-challenges-in-brussels
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IAG takeover of Air Europa faces fresh challenges in Brussels
Brussels is preparing to lay out objections to International Airlines Group’s second attempt to buy Spanish carrier Air Europa in a move that signals significant competition obstacles to the deal. IAG, which owns five airlines including British Airways and Spanish flag carrier Iberia, agreed in February last year to buy the 80% of Air Europa it does not already own for about E400m, after abandoning an earlier effort at the height of the pandemic. The European Commission last month opened an in-depth investigation into whether the new deal would harm consumers by stifling competition and is due to decide on whether it meets EU merger rules by June 7. But it is poised to detail objections as early as next month, according to three people with knowledge of the matter, who said such a move would amount to a warning that the transaction faces a veto unless credible concessions are made. Regulators fear the deal will reduce competition on Spanish domestic and international routes, and have been studying whether the merger would make it difficult for rivals to offer their services or have other indirect effects such as raising prices. They are concerned that the remedies discussed so far to enable proper competition are weak because the airlines face only small competitors with no credible rivals on the routes they both fly, two of the people said. Europe’s other two major long-haul airline groups also turned to consolidation as the industry emerged from the disruption of the pandemic. Lufthansa has agreed to take a 41% stake in ITA Airways, the successor company to Italy’s Alitalia, while Air France has taken a 20% stake in struggling Scandinavian airline SAS. Brussels opened an in-depth probe into the Lufthansa deal in January. The EC sees IAG’s new deal to buy Air Europa as even “more problematic” than its first, said two of the people familiar with the matter, because the Spanish target is now in a stronger financial position than during the pandemic. “It’s even worse this time,” said one person with direct knowledge of the probe.<br/>
