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 
  • However, the CMA put an end to the acquisition temporarily last month.  

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

Cancelled: IAG’s Air Europa contract will be terminated 

IAG and Air Europa received notices from the Competition and Markets Authority on 19 November. They were given an ultimatum of 19 January 2022 to make their initial decisions.

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.

The Spanish branch of IAG has been a growing influence in the aviation conglomerate.

Spanish competition regulators also raised concern about the deal.

IAG offered regulators 13 short- and medium-haul routes, and two long haul routes to Madrid and Barcelona. However, this did not suffice to address the concerns. Reuters predicts that a veto will be taken.

IAG was initially criticised for its pursuit of the takeover in the pandemic. It spent several months trying to lower 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. In the meantime, its rivals Air France KLM and Lufthansa are back in operating profit.

IAG shares dropped 0.8% in early trading, to 131.56p. This brings year-to-date losses down to 12.6%