The Unite union has informed the EU Commissioner for Competition that it intends to act as a third party opposing the acquisition of Air Europa by the International Airlines Group.
BA’s parent company announced plans to buy Air Europa for €1 billion in November last year.
IAG stated at the time that the move would transform its Madrid hub “into a true rival to Europe’s four largest hubs: Amsterdam, Frankfurt, London Heathrow and Paris Charles De Gaulle”, and would re-establish the group “as a leader in the highly attractive Europe to Latin America and Caribbean market”.
Unite says it has “strongly criticised IAG’s decision to spend hundreds of millions of pounds on a new acquisition, while pleading poverty as an excuse to execute its brutal ‘fire and rehire’ strategy on its BA workforce – stripping workers of their terms and conditions while cutting thousands of jobs”.
And the union now says it has “identified a number of serious competition concerns with the potential to scupper the Air Europa deal”, and is in talks with The Department for Competition.
Unite’s stated concerns are:
- IAG’s increasing domination of the market for flights from Europe to South America
- IAG’s dominant position at Madrid-Barajas airport and the group’s return to a monopolistic hold over the Spanish domestic market
Unites says that the issues “make it likely that the acquisition would drive up ticket prices and reduce the number of fights on some routes”.
Commenting on the news Sharon Graham, Unite’s executive officer, said:
“Unite is questioning why IAG is seeking to fire and rehire the workforce at BA while its parent IAG is ploughing ahead with buying an airline for over €1 billion. There are a number of reasons why this merger of Iberia with Air Europa would appear to be anti-competitive.
“The case team at DG Competition have been very open to us sharing our concerns with them. We are now gathering further detailed evidence from a number of expert sources and discussing the takeover with other parties that could be negatively impacted.
“We are confident that we have a strong case and we look forward to officially presenting all our evidence when Phase I of the investigation begins.”
Business Traveller contacted IAG for a response to Unite’s statement, and was told that the group would not be commenting directly. However we were pointed towards an interview which IAG’s CEO Willie Walsh gave to Ian King of Sky News last week, in which Walsh said:
“First and foremost, IAG is not going through, the acquisition is done at an Iberia level, and I think it’s important to stress IAG is a single economic entity with multiple operating entities and when we talk about the cash in the business, we aggregate the cash that is held by all of the individual airlines.
“But if Iberia is to progress the deal with Air Europa, it will be because it’s in the best interests of Iberia and the acquisition will be made by Iberia – not by British Airways, British Airways will not have any involvement in it, and not a single penny of British Airways money will go towards that acquisition.
“So each of the individual airlines have cash balances, they have their own balance sheets, and it’s the responsibility of each of the management teams to ensure that they’re running the business in an appropriate fashion. If the Iberia/Air Europa merger goes ahead, it’s not going to in any way impact on the people at British Airways.”