IAG International Airlines Group is willing to offload up to 40% of frequencies that Air Europa (UX, Palma de Mallorca) operated in 2023 to competitors in order to gain European Commission approval of its planned takeover of the carrier via its Iberia (IB, Madrid Barajas) subsidiary, the group’s chief executive, Luis Gallego, told the newspaper El País in an interview.
“If we acquire Air Europa, there will not be a single route in which it and Iberia operate exclusively. We understand that we must favour competition,” he said, adding that its latest proposal to Brussels is far more ambitious than the remedies offered in 2020 and 2021 when the group first attempted to acquire the Globalia-owned company.
Several airlines, including Plus Ultra Líneas Aéreas, Volotea, and Ryanair, have stated their interest in obtaining any slots and frequencies yielded by Air Europa and Iberia.
The holding is analysing each route on an individual basis with the European Commission to single out any competitivity issue, to guarantee there will not be any routes where the two carriers operate exclusively. In January 2024, the commission opened an in-depth investigation into the acquisition, citing concerns that it could reduce competition in the Spanish market.
The antitrust regulator currently has until July 15 to announce its decision on the merger review, although it briefly employed a ‘stop the clock’ mechanism allowing it to gather more information without using regulated time and it may do this again in the future. In fact, IAG entered the review process knowing it could last until late 2024.
If Air Europa does abandon 40% of its frequencies, IAG would be willing to wet lease its fleet and crews to keep its aircraft in the air. However, “another option is to employ said fleet to guarantee the projected growth within the group. This year, IAG will grow by 7% and Iberia by up to 14% in terms of ASK.”
An eye on developments at TAP
IAG remains interested in acquiring TAP Air Portugal (TP, Lisbon). However, the acquisition of Air Europa remains the priority.
“Looking to TAP will depend on the conditions. That company operates in markets where IAG does not have a sizeable presence, like Brazil, and would be an opportunity to create a dual hub structure in southern Europe [at Madrid Barajas and Lisbon] like the one we have in London Heathrow and Dublin International,” Gallego said.
