The Lufthansa Group is persistently seeking approval to acquire the Italian airline ITA Airways, while IAG (International Airlines Group) is updating its plans for Air Europa, aiming for regulatory approval.
Lufthansa Faces Regulatory Concerns Over ITA Airways Acquisition
The acquisition of ITA Airways by Lufthansa encounters several hurdles. The primary concern is the potential delay of the European Commission’s decision until after the European Parliament elections in June 2024. Additionally, issues regarding the former Alitalia employees must be addressed.
Since January, the EU Competition Commission has scrutinized the merger between Lufthansa and ITA. So far, neither Lufthansa as the buyer nor the Italian Ministry of Finance as the seller have managed to dispel doubts about their proposals. Authorities demand «concrete measures to prevent adverse effects on competition in these markets» and have highlighted several «sensitive areas» of the agreement, such as Italy’s connectivity with Central Europe, North America, India, and Japan.
IAG Divests Air Europa to Secure Approval
Mirroring Lufthansa, IAG is pursuing the acquisition of Air Europa. To address the Commission’s concerns, Luis Gallego, CEO of IAG, proposes «transferring the equivalent of 40 percent of Air Europa’s flights to other airlines.», as published to El País from Madrid. The executive pointed out that the combined market share of Iberia and Air Europa in Madrid’s long-haul flight sector is 64%. «This is significantly lower than that of other European airlines at their bases,» he emphasized. However, IAG has presented a plan to transfer the equivalent of 40% of the flights operated by Air Europa to other airlines in 2023.
«If we acquire Air Europa, there won’t be a route where we are the only option. We understand that we must promote competition.» IAG is willing to relinquish even more routes than in the failed acquisition attempt of 2021. Gallego explained that «we are analyzing each route with the European Commission to identify potential competition issues.»
The closure of routes would have an additional positive effect for the group: the surplus aircraft could be leased to competitors, even with crew, or used for the group’s planned expansion. Both options are beneficial given the global context, where manufacturers are struggling to meet aircraft delivery demands.
