British Airways owner IAG to call off £435m Air Europa acquisition amid competition watchdog probe
- Deal had been intended to bolster IAG’s dominance in Spain’s busiest airport
- But last month the CMA brought the acquisition to a temporary halt
British Airways owner IAG is set to cancel its €500million (£435million) acquisition of Spanish budget airline group Air Europa.
IAG told investors on Wednesday it was in ‘advanced’ discussions to terminate the deal with Air Europa owner Globalia, bringing an end to a deal that has been in the works since November 2019.
It follows a November intervention from Britain’s competition watchdog, which put a temporary halt to the deal on fears it would ‘result in a substantial lessening of competition’ within the UK.
Cancelled: IAG’s Air Europa deal set to be called off
The Competition and Markets Authority gave notice to IAG and Air Europa of its investigation on 19 November and set a deadline of 19 January 2022 for its initial decision.
IAG’s reasoning for the deal was to give its existing airlines in Spain – Iberia and Vueling – dominance at the country’s largest airport, Madrid Barajas, and on routes to South America.
IAG’s Spanish arm has become increasingly influential in the airline conglomerate.
But there were also concerns raised over the deal by Spanish competition regulators.
The remedies offered to regulators by IAG – to give up 13 short and medium-haul routes and two long-haul routes at Madrid and Barcelona airports – were not enough to assuage the concerns and a veto was likely, according to Reuters.
IAG had initially came under fire for pursuing the takeover during the pandemic and spent months trying to reduce the price.
It made a €452million (£387million) loss for the three months to September and it forecasts a €3billion (£2.57billion) loss for the full year. Rivals Air France-KLM and Lufthansa, meanwhile, have returned to operating profit.
IAG shares fell 0.8 per cent in early trading to 131.56p, bringing year-to-date losses to 12.6 per cent.