With every indication that European competition regulators would likely veto the takeover of Air Europa by IAG, IAG has opted to withdraw from current negotiations to assess the potential for some form of future tie-up. IAG owns multiple airlines including Spanish carriers Iberia, Vueling and Level.
Indications are that European regulators were concerned that the takeover of Air Europa by IAG would have a damaging effect on competition in the Spanish domestic market and also international routes to the country. Air Europa, which is owned by Spanish company Globalia provides connections to Latin American countries as well as flying to European destinations. The acquisition of the Spanish carrier was intended to help IAG’s hub in Madrid to compete more successfully against European competitors.
This move by IAG comes after a recent renegotiation on the originally agreed acquisition price as a consequence of the effects of the global pandemic on air travel. IAG had reduced its offer for Air Europa by 50% to €500 million (£423.7 million) and also required deferment of the payment for six years. IAG had done its best to counteract the concerns of competition regulators by foregoing 13 short- and medium-haul routes and two long-haul routes at Barcelona and Madrid airports, but this was understood to be insufficient to allay their concerns. Indications are that in walking away from the table prior to an official rejection from competition regulators of the proposed takeover, this will leave IAG in a stronger position should it come up with an alternative proposition.
