British Airways and Iberia owner IAG was willing to sacrifice 52% of Air Europa’s 2023 frequencies to secure its acquisition of the business, but that was not enough to satisfy the European Commission.
Speaking on 2 August, the day after the group said it had terminated its agreement with Air Europa’s parent Globalia to acquire the remaining 80% of the business, chief executive Luis Gallego insisted IAG had put forward a “very generous and ambitious” remedy package as it sought to allay the Commission’s competition concerns.
“We proposed to transfer 52% of Air Europa frequencies in 2023 to two strong remedy takers but unfortunately this hasn’t been enough, and for that reason we consider that the deal doesn’t make sense for the group and that’s the reason we are cancelling the deal,” he states.
Iberia and Air Europa are the two biggest operators at Madrid Barajas airport and the Commission had highlighted a potential erosion of competition on flights into and out of Spain.
Gallego notes that despite IAG’s termination of the acquisition, it still believes in the strategic logic behind the deal.
“It was going to be a very good deal for the Madrid hub and for Spain,” he says, adding that it would have enabled the Spanish capital to compete with Europe’s other major hubs.
Potential remedy takers included a partnership between Avianca owner Abra Group and Spanish low-cost carrier Volotea, who recently outlined plans to launch a hub operation at Madrid if the IAG-Air Europa tie-up was approved.
IAG says it has no plans to relinquish its 20% stake in Air Europa in the short term and says that Iberia will continue to embrace organic growth opportunities at Madrid.
