The saga of IAG, the parent company of British Airways and Iberia, and its pursuit of Spanish airline Air Europa refuses to die.
To summarise events so far:
- In November 2019, IAG announced a €1 billion plan to acquire Air Europa, which would see the airline leave the SkyTeam alliance, join oneworld and adopt Avios as its loyalty currency
- The announcement went down badly with the EU because it would give IAG 73% of the domestic Spanish airline market (the figure is even higher if you exclude intra-Canary Islands services)
- During the pandemic, IAG managed to halve the acquisition price to €500 million, with no requirement to pay until 2026
- In November 2021, the UK announced its own investigation into the deal, because Air Europa is a low cost competitor on certain long haul routes from Britain via a connection in Madrid
- In December 2021, IAG appeared to throw in the towel and was preparing to pay the €40 million abort fee it had promised if the deal did not complete
- In February 2022, it was reported that Air Europa had opened discussions with other airlines
IAG has now decided that if it can’t have Air Europa, no one else will have it either.
IAG has agreed to lend Globalia, Air Europa’s parent, €100 million with no security. Clearly no bank would be willing to lend money to a loss making travel and tourism group on such terms.
The catch is that Globalia has had to agreee not to sell Air Europa to another other airline for next 12 months. For the following three years, Air Europa has to guarantee IAG the opportunity to match any bid made by another airline.
IAG is clearly hoping that, given enough time, it can find a way around the regulatory hurdles. The problem is that there is no other domestic carrier in Spain which is large enough to take on the routes that Air Europa would need to sell. IAG may need to find a way of creating ‘an airline within an airline’ which could be sold as a stand-alone carrier and future competitor.