The IAG group, which includes Iberia, Vueling, British Airways, and Aer Lingus, has canceled its acquisition of Air Europa. The decision comes after the European Commission demanded greater concessions regarding routes and slots to maintain market competition. This cancellation resulted in a €50 million penalty paid to Globalia, Air Europa’s parent company.
According to IAG’s CEO, Luis Gallego, the company made the best decision to protect its shareholders’ interests. Despite the setback, IAG remains committed to competing effectively from its hub in Madrid.
The European Commission’s Competition Directorate had recently indicated that the proposed remedies, including distributing 52% of Air Europa’s production among competitors, were insufficient to prevent harm to consumers. This led IAG to withdraw from the acquisition rather than face a likely rejection from the Commission.
The first attempt to acquire Air Europa began in October 2019 but was paused in 2021 due to similar concerns from the European Commission. This latest attempt saw IAG propose significant remedies, including partnerships with Avianca and Volotea, agreements with Ryanair and Binter for short and medium-haul routes, and World2Fly and Iberojet for long-haul operations. However, these measures failed to satisfy the Commission.
Despite the approval of Lufthansa’s acquisition of ITA (formerly Alitalia), IAG’s bid for Air Europa faced more stringent scrutiny due to the potential for excessive dominance in both the Spanish domestic market and key international routes.
