IAG Proposes Significant Concessions to Secure Air Europa Acquisition

In a recent interview with El País, Luis Gallego, Chief Executive of IAG International Airlines Group, outlined the group’s readiness to relinquish up to 40% of Air Europa’s flight frequencies from 2023 to address European Commission concerns regarding its planned acquisition of the airline through its Iberia subsidiary. This strategic move aims to facilitate regulatory approval by ensuring that no single route is monopolized by the merged entity, thereby promoting competition in the industry.

Gallego emphasized that the current proposal to the European Commission is much more comprehensive than previous offers made during the initial acquisition attempts in 2020 and 2021. The intent is to prevent any overlap on routes solely operated by Iberia and Air Europa, a commitment that underscores IAG’s dedication to maintaining a competitive market landscape.

This development has attracted interest from several airlines, including Plus Ultra Líneas Aéreas, Volotea, and Ryanair, which are keen on acquiring the slots and frequencies that might be released by Air Europa and Iberia as part of the divestiture.

The European Commission, which initiated a thorough investigation into the merger in January 2024, is scrutinizing the deal’s implications for competition within the Spanish aviation market. The regulatory body has until July 15 to make a decision but may extend this deadline if additional information gathering is deemed necessary.

Additionally, Gallego revealed potential plans for utilizing Air Europa’s fleet and crew should the need arise to offload frequencies. Options include wet leasing to maintain operational continuity or reallocating resources to support IAG’s anticipated growth, with Iberia expected to expand its available seat kilometers (ASK) by up to 14% this year.

Beyond the Air Europa deal, IAG’s interest in acquiring TAP Air Portugal remains active, although it is not currently a priority. Gallego highlighted the strategic value TAP could bring, especially in enhancing IAG’s footprint in markets like Brazil and creating a dual-hub system in Southern Europe between Madrid Barajas and Lisbon, complementing IAG’s existing hubs in London Heathrow and Dublin International.

This comprehensive approach by IAG reflects a careful balancing act between expansion ambitions and regulatory compliance, aiming to reshape its operations while fostering a competitive and dynamic European aviation sector.