It was over a year ago, in November 2019, that news broke of IAG’s intention to purchase Spanish carrier Air Europa. Of course, since then, much has changed in the aviation industry, and with it, this acquisition deal. Let’s look at the latest news concerning the Air Europa-IAG deal.
The most recent news: A reduced purchase price
As far as we know, the most recent news concerning Air Europa is that the original purchase price of €1 billion ($1.23 billion) has now been halved to €500 million ($6.13 billion). This substantially lower offer reflects the stark impact of the 2020 global health crisis on the aviation industry. Similarly, Air Canada drastically reduced its purchase price of leisure carrier Air Transat (from $13 per share to $5) for the same reasons.
Competition concerns, or lack thereof
Despite concerns raised by UK’s Unite union, the European Commission (EC) has yet to announce any sort of inquiry or investigation into the deal as it did with the Air Canada-Air Transat acquisition. The EC had announced the investigation in May, citing concerns that the proposed transaction may reduce competition in the passenger air transport services between the European Economic Area (EEA) and Canada.
In June, Business Traveller reported that Unite had “identified a number of serious competition concerns with the potential to scupper the Air Europa deal” and was in talks with The Department for Competition.
Unite’s stated concerns were:
- IAG’s increasing domination of the Europe-South America market for flights
- IAG’s dominant position at Madrid-Barajas airport and a monopolistic hold over the Spanish domestic market
In June, Unite issued the following statement regarding its dealing with the EC’s Directorate-General (DG) for Competition:
“The case team at DG Competition have been very open to us sharing our concerns with them. We are now gathering further detailed evidence from a number of expert sources and discussing the takeover with other parties that could be negatively impacted…We are confident that we have a strong case and we look forward to officially presenting all our evidence when Phase I of the investigation begins.” – Sharon Graham, Unite’s executive officer via Business Traveller.
However, it’s been six months since Unite made its concerns public. During this entire period, no news has come from the European Commission regarding a formal investigation in the same way it did for Air Canada and Air Transat.
As far as we know, no dates have been offered for the completion of the deal. IAG chief Willie Walsh had told reporters in May,“We still have to go through the full competition regulatory approval process. And that is ongoing. So at this point, the process continues.” On the regulatory side, no news has arisen regarding the deal.
Do you think regulators will step in and respond to competition concerns? Let us know in the comments.