European Commission concerned about IAG’s deal to buy Air Europa

IAG’s long-running purchase of Spanish carrier Air Europa could “restrict competition” on airline routes to and from Spain, according to a preliminary view of the €400 million deal by the European Commission.

The acquisition by IAG of Air Europa was first agreed in 2019 when the price was €1 billion before the bid was scrapped two years later following the Covid-19 pandemic.

IAG, which already owns British Airways, Iberia, Vueling and Aer Lingus, later revived its efforts to buy Air Europa in February 2023 at the much lower price tag of €400 million.

The European Commission, which briefly suspended its antitrust investigation into the deal earlier this year, said in a statement that the IAG-Air Europa deal could reduce competition on routes between mainland Spain and the Balearic and Canary islands, as well as between Spain and destinations in Europe and the Middle East, and on services to North and South America.

“The Commission is concerned that, absent suitable remedies, the removal of Air Europa as an independent airline may have negative effects on competition in these already concentrated markets,” said the commission in its initial findings.

The statement of objections is a formal step in the investigation process but it does not “prejudge” the commission’s final decision, which has to be made by 15 July.

IAG submitted proposed commitments to the commission in February to address some of its concerns over the Air Europa deal but these remedies were “considered insufficient”. IAG has until 10 June to offer further concessions to the commission.

The commission has also officially raised concerns about Lufthansa Group’s proposed purchase of a stake in Italian carrier ITA Airways over fears it could increase flight prices or “decrease quality” of services to and from Italy. The deadline for a decision on this acquisition has just been extended by one week to 13 June.