The European Commission (EC) has sent a new statement of objections over the proposed acquisition of Air Europa (UX, Palma de Mallorca) by IAG International Airlines Group via its Spanish subsidiary Iberia (IB, Madrid Barajas).

The Commission said the merger “may restrict competition in the market for passenger air transport services, in particular for routes within, to and from Spain” and is concerned that customers could face increased prices and decreased quality of services post transaction. IAG is looking to acquire the remaining 80% of Air Europa, currently owned by parent Globalia, for EUR400 million euros (USD435 million). The holding group had been expecting the statement of objections, a formal step in an investigation which does not preclude any potential outcome.

The Commission currently has until July 15, 2024, to make a final decision on the merger.

According to the EC’s in-depth investigation launched in January, the merger could reduce competition on Spanish domestic routes, short-haul routes connecting Spain with countries in Europe and the Middle East, and long-haul routes connecting to North and South America. These routes amount to a total annual spending of over EUR3 billion (USD3.2 billion).

Following the writing of the objections raised against the merger, IAG can submit remedies addressing the EC's concerns, and request an oral hearing. In a statement sent to ch-aviation, IAG said the process has entered a decisive period during which the EC will scrutinise IAG's concessions. "Our proposal is very solid and we believe it will meet all the Commission's concerns. We are ready to divest the equivalent of 40% of the flights operated by Air Europa to other airlines by 2023. We also commit that no route will be operated exclusively by Iberia and Air Europa. Only healthy competition between the hubs of southern and northern Europe and the consolidation of aviation in our continent will allow Europe to compete on an equal footing with North America, Asia and the Middle Eastern countries," it said.

Earlier this month, it was reported that IAG was willing to offload up to 40% of frequencies Air Europa operated in 2023 to competitors to gain EC approval.

Meanwhile Brazil's competition regulator (Conselho Administrativo de Defesa Econômica - CADE) unconditionally approved, the Iberia/Air Europa tie-up on April 22, 2024.