A second attempt by British Airways owner International Airlines Group to buy Spanish carrier Air Europa is expected to face a lengthy probe in Brussels
The Financial Times today reported that the deal may even be blocked amid concern it will lead to higher ticket prices, citing four people familiar with the matter.
IAG, which also owns Spanish carrier Iberia, agreed in February to buy the 80% of Air Europa it does not already own for about €400 million.
It was suggested at the time that completion could take as long as 18 months to clear regulatory hurdles.
The tie-up is seen as increasing IAG’s 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, sources reportedly said.
“This is the second time this merger has been attempted, and it doesn’t look good,” one of the people told the FT. “We didn’t like the first one. It’s going to be worse this time around.”
IAG dropped a first attempt to acquire Air Europa in 2021 due to regulatory concerns.
IAG is the biggest airline operator in Spain with its ownership of budget carrier Vueling alongside Iberia, while Air Europa is the third largest player.
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 while the European Commission said that the proposed deal had yet to be filed with regulators.