British Airways Owner IAG Cancels Air Europa Acquisition

International Airlines Group (IAG) on Thursday announced the termination of its agreement with Spain’s Globalia to acquire the remaining 80 percent of Air Europa for 400 million euros.

IAG, which already owns 20 percent of the Spanish carrier and is also the parent company of British Airways, made the announcement with the release of its half-year results.

On February 23, the group had entered into the agreement with Globalia to purchase the remaining share capital of Air Europa Holdings. The acquisition was subject to approval by relevant competition authorities.

On Thursday, the group said the acquisition was “no longer probable” and therefore decided to withdraw from the transaction. The Board of Directors has concluded that in the current regulatory environment it would not be in the best interests of shareholders to continue with the transaction,” IAG said in a statement.

The group will now pay Globalia 50 million euros as a “break-fee” in accordance with the terms of the agreement and continue to hold a 20 percent equity stake in Air Europa.

EU had competition concerns

On Friday, the European Commission said that up to the abandonment of the transaction, the discussions with IAG and Air Europa and the proposed remedy package “were not able to adequately address competition concerns”.

The Commission had opened an in-depth investigation into the proposed transaction on January 24 and sent a statement of objections to IAG on April 26.

According to Executive Vice-President Margrethe Vestager, in charge of competition policy, the Commission’s in-depth analysis indicated that the merger would have “negatively affected competition” on a large number of domestic, short-haul and long-routes within, to and from Spain on which the two airlines compete closely.

“We were concerned that the transaction may have led to adverse effects for passengers – business customers and consumers alike – in terms of increased prices or decreased quality of services. IAG offered remedies, but taking into account the results of the market test, the remedies submitted did not fully address our competition concerns,” Vestager said.

IAG is also the parent company of Iberia, Aer Lingus, Vueling and LEVEL.

Air Europa is represented in Greece by TAL Aviation.