Who is British Airways' competitor
The British Airways parent company International Airlines Group (IAG) takes another step in the consolidation of the European aviation industry and buys the Spanish airline Air Europa. IAG is paying one billion euros for the shares in the second largest Spanish airline.
In this way, IAG continues to set itself apart from the competition in terms of the number of takeovers and above all strengthens its own market position in Spain and on the routes to Latin America. In addition to British Airways, the group also includes Aer Lingus, the low-cost airlines Level and Vueling, and Iberia, which is formally taking over Air Europa.
However, the transaction is still subject to approval under competition law. With IAG now owning three Spanish airlines, Air Europa, Vueling and Iberia, the European Commission may ask for concessions.
Air Europa operates a fleet of 66 aircraft and handles almost twelve million passengers annually. For comparison: the German Condor flies around eight million passengers with around 60 aircraft.
In addition to many domestic routes and to European destinations, Air Europa primarily serves destinations in Latin America. Although it is much smaller than its previous competitor Iberia, Air Europa has recently been profitable. For IAG, the acquisition is also of great strategic importance because the previous partner in the region, the Chilean-Brazilian LATAM Airlines, has just switched sides and defected to competitor Delta Air Lines. Together with Air Europa, however, IAG can now increase its market share in traffic between Europe and South America from less than 20 percent to around a quarter.
Lufthansa has repeatedly expressed interest in Alitalia, but has not yet reached an agreement
IAG boss Willie Walsh expects the takeover to turn Madrid Airport into a real competitor for the four major European hubs London-Heathrow, Paris-Charles de Gaulle, Amsterdam and Frankfurt. However, the geographical location of Madrid on the western edge of Europe means that this will only apply to certain traffic flows. Air Europa is likely to leave the SkyTeam alliance (Air France-KLM, Delta) under the new owner. IAG did not comment on whether the Air Europa brand will be retained in the long term or whether it will be incorporated into Iberia.
The transaction is not good news for Lufthansa either, because it is already in a difficult position on the South American routes. In addition, it can hardly sit and watch as IAG is getting bigger and bigger. The last opportunity for a large takeover for the time being is also extremely problematic: Alitalia, which has been under bankruptcy protection for about two years and only exists because of the most generous government loans. The airline is for sale, but after decades of mismanagement it would have to be fundamentally renovated and downsized. So far, every Italian government has worked with the trade unions to prevent major cuts. Despite everything, Lufthansa has repeatedly expressed interest in Alitalia, but no agreement has been reached so far.
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