British Airways owner International Airlines Group’s second attempt to buy Spanish carrier Air Europa is expected to face a lengthy probe in Brussels and may even be blocked amid concern it will lead to higher ticket prices, according to four people familiar with the matter.
IAG, which also owns Spanish flagship carrier Iberia, struck a deal in February to buy the 80 per cent of Air Europa it does not already own for about €400mn.
The carrier is betting the tie-up will increase its access to the fast-growing Latin American market and help turn Madrid into another European hub.
The proposed deal had yet to be formally filed for approval in Brussels, but regulators were readying another lengthy probe, the people said.
“This is the second time this merger has been attempted, and it doesn’t look good,” one of the people said. “We didn’t like the first one. It’s going to be worse this time around.”
In 2021, IAG ditched a first attempt to acquire Air Europa because of regulatory concerns. IAG is the biggest airline operator in Spain while Air Europa is the third largest player.
The former initially agreed to pay €1bn for Air Europa in a deal that was struck in late 2019, before the pandemic wreaked havoc across the airline industry.
As part of their assessment, regulators will look at the effect of the deal route by route. Authorities in Brussels were concerned at the lack of competition on specific routes, the people said.
However, IAG could still come up with sufficient concessions and evidence that competitors could enter crucial routes that would be enough to secure EU approval for the deal, they added.
IAG declined to comment. The EU did not immediately respond to a request for comment.
EU regulators have previously blocked Ryanair’s attempts to acquire Irish rival Aer Lingus over concerns the merger would lead to unfair competition on key routes.
Last year IAG has returned to annual profit for the first time since the start of the pandemic as airlines enjoyed a return of pent-up demand following the pandemic.
