Home > Universe > The owner of BA, IAG, will discard the purchase plan of the Spanish airline Air Europa

The owner of BA, IAG, will discard the purchase plan of the Spanish airline Air Europa

Habboin 20/12/2021 Universe 191
The British Airways and Iberia owner, International Airlines Group , is to scrap its plan to buy the Spanish airline Air Europa, a deal that was being investigated by competition authorities in the UK...

The British Airways and Iberia owner, International Airlines Group , is to scrap its plan to buy the Spanish airline Air Europa, a deal that was being investigated by competition authorities in the UK and the EU.

The move comes more than two years after International Airlines Group (IAG) – under its former chief executive, Willie Walsh – first announced plans to buy the carrier from the Spanish tourism group Globalia for €1bn (£850m) in November 2019, before renegotiating the deal at half the price after Covid-19 closed down most international travel, prompting huge losses at airlines.

Stephen Gunning, IAG’s chief financial officer, said in a statement: “International Airlines Group and Globalia today confirm that discussions are at an advanced stage to terminate the agreement.”

The UK competition authorities and the European Commission were both investigating whether the merger would reduce competition in the British and Spanish air travel markets respectively.

The UK’s Competition and Markets Authority said last month it was considering whether to launch a formal investigation into the takeover, and would make a decision by mid-January.

Reuters reported claims from sources that European regulators had indicated they would not allow the takeover to go through without further concessions.

IAG already owns Iberia, Spain’s flag carrier airline, and the low-cost carrier Vueling. The group had said the purchase of the Mallorca-based Air Europa would have benefited consumers and made its Madrid hub more competitive. The takeover would also have allowed IAG to target the South American market.

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In the UK, Air Europa flies from London Gatwick to a range of cities in Spain, and from Edinburgh to some South American destinations. Iberia and Vueling fly some of the same routes.

The British trade union Unite, which represents some ground crew, had also voiced its opposition to the deal, accusing IAG of trying to cut costs in a way that would affect staff, while also spending €500m on a takeover.

Analysts at the City broker Bernstein said they expected IAG to have to pay €40m to end the merger discussions but said this was probably insignificant “compared to the financial liabilities likely at Air Europa”.