2023-10-31 02:49:04
The integration of Air Europa into IAG, Iberia’s parent company, is on its way to encountering an even harsher filter than was already expected from the European Commission, which must ultimately give approval to the operation. . The Belgian Didier Reynders has come to the position of acting Commissioner for Competition with the warning under his arm that he may demand stricter conditions from airlines seeking to merge to ensure fair competition.
As he explained in a recent interview with the British newspaper “Financial Times”, Reynders considers that there is evidence that the concessions now imposed on airlines to merge, such as the granting of take-off and landing slots at airports to rivals – ” slots” – have not always achieved the expected results. According to the commissioner, some time slots have been left unused or have not been used on the planned routes.
“Some remedies – the aforementioned slot concessions – are not efficient. In the past, the main request was to request [a las aerolíneas que ofrecieran] time slots to other companies,” explains Reynders. But if this is “not enough,” regulators must seek other concessions. “A few years ago, we were sure that the slots solution was a good one. Maybe [ahora] the results are not there,” he explained.
In the same report, an antitrust lawyer explains to the “Financial Times” that there is “skepticism” in the commission towards the current system, adding that enforcing the disposal of assets – which could include airplanes, cargo businesses or contracts with ground operators – “would directly support the entry and viability” of a competitor.
Consolidations in the sector
Reynders’ statements come at a time when consolidation movements are taking place in the airline sector in Europe, including that of Spanish companies. The purchase of Air Europa by IAG was closed last February for 500 million euros after in December 2021 both airlines broke a previous agreement they had reached and the pandemic also ruined another previous agreement. end of 2019 valued at 1,000 million euros. The European Commission had already expressed very serious doubts about the suitability of the second agreement voluntarily broken by Air Europa and IAG to complete the operation. In June 2021, Competition had warned that it was concerned that the concentration of both airlines would reduce the offer of flights in seventy pairs of cities of origin and destination within Spain and to or from this country, between which both airlines offer services. direct.
To overcome this obstacle, the IAG and Air Europa decided to break their initial agreement and sign a new one, which must now be approved by the European Commission. The holding company expected to close the operation within a period of about 18 months since it was announced, although now its president, Luis Gallego, has publicly declared that his objective now is for it to be done in the last quarter of the next fiscal year. IAG and the European Commission are currently exchanging information on the operation in what constitutes the phase prior to the formal presentation of the acquisition proposal to the EU Competition authorities. Once it is sent, time will begin to run and Brussels will have 35 days to approve the operation as planned or request additional measures. You can also choose to move to the so-called phase two, in which you would analyze the acquisition in more detail.
The Air Europa operation is not the only one pending at this time in the airline sector in Europe. Air France-KLM has reached an agreement to take over 20% of SAS Scandinavian Airlines as part of a rescue of the Nordic airline involving private equity firm Castlelake and the Danish State. Lufthansa has also agreed to purchase an initial 41% stake in ITA Airways, the company emerged from the remains of Alitalia.
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