[transtraxman]

So Iberia takes over the brand “Air Europa” but maintains it, and what happens next?
A)Will there be two operators flying across the Atlantic and into Europe in parallel? i.e.Air Europa versus Iberia, Iberia Express and Vueling.
B)Will Air Europa replace LEVEL? – if it does replace it from one airport it should replace it from them all.
C)So if LEVEL is destined for the dustbin then what happens with its operators (“Open Skies” and Anisec”) or has that policy not been thrown out of the window?

There seems to be a real mix-up to be sorted out if this take-over goes through.

[TominScotland]

I may be totally wrong here but I cannot see how EU competition authorities can intervene here, given the virtual LH Group monopoly in place in much of central Europe – LH, EW, LX and OS. In both Spain and Germany, competition is provided by FR and other low cost airlines.

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[tomwjsimpson]

Not good news for SkyTeam . .

Likely loss of Alitalia and Air Europa!

[canucklad]

TominScotland wrote:

given the virtual LH Group monopoly in place in much of central Europe

Morning Tom
You’re right, but for me this grouping also should never happened .
I’ve argued this point before on the forum.

The laws protecting us from monopolistic /cartel business practices just don’t seem to apply to the airline industry.

OK, I get that airline alliances might bring benefits to us all , via codeshares and seamless travel through larger networks .Importantly, the business model of these alliances allows for independent thinking and decision making at local level.

However, I’d argue the opposite with these airline business groupings , and it might be semantics , but for all intensives purposes IAG, LH & AF/KLM now operate as mega carriers. IAG get a bad rep , but the LH group is just as bad, pretty much eliminating competition by flexing fares, timetables and routings to turn central Europe into a one airline ( 3 different logo’s ) monopoly. You just have to look at how many carriers in LH’s area of influence that have gone under to realise that it’s not a level playing field !!

You might correctly quote FR as a competitor, and a reason why legacy carriers band together, but I’d argue that FR generally seeks out its own demographic audience. Creating their own new traffic on niche routings that the legacies just don’t touch.

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transtraxman

[transtraxman]

So at last this attempted purchase has been clarified.
IAG pays the specified penalty, €40 million, for breaking the agreement in the original contract. Now it is to pay an extra €35 million to close the deal and avoid litigation. To me that seems an expensive price but who knows what else has been agreed under what circumstances to make it worthwhile.

People are now speculating that the original takeover offer was to stump any efforts by AirFrance/KLM to establish a subsidiary in Madrid aimed at Central and South America. IAG´s attempt is understandable in those circumstances, but now are we back to an open market? Or has IAG covered its back? The European has been very militant in its persuance of IAG , making it quite clear that big concessions would have to be made to get approval. Early on IAG tried to cover that by offering a slew of routes in Spain (and elsewhere?) to Volotea. Then as the EU was due to explain its decisions, the UK Competition authorities stepped into the ring (There is no obvious reason to know why?) – further delaying the project. Was this deliberate to force IAG to renounce? – only they will know.

That original agreement would have immunated Volotea from any IAG attempt to take it over. Now Volotea is fair game. Remember its two founders were also the founders of Vueling. So what situation do we have? Air Europa is most likely to be taken over by AirFrance/KLM. With France´s restrictions on other airlines at Orly (principally) and CGD, Volotea´s routes and slots, in France, become really appealing. Thus this could be IAG´s focus to amplify its group – and not a bad one.

On the other hand IAG has to compensate its continental imbalance. Outside western Europe IAG group is really lacking. There are opportunities in Northern, Central, Eastern and Southern Europe, both in long-haul and in short-haul. I will not elaborate on this as I have already done so in other forums. Opportunities exist but you have to know how to combine them, i.e. have a strategy. Does IAG have a strategy?

“IAG, Globalia confirm talks to halt Air Europa acquisition”, (ch-aviation, 15-12-21)

https://www.ch-aviation.com/portal/news/110680-iag-globalia-confirm-talks-to-halt-air-europa-acquisition

Please take note of the quantities owed by Globalia!!

“Backing Out Of Air Europa Just Cost IAG €75 Million”, (Simple Flying, 16-12-21)

Backing Out Of Air Europa Just Cost IAG €75 Million

…and the news from the horse´s mouth,
“Air Europa termination agreement”, IAG press release, 16-12-21.

https://otp.tools.investis.com/clients/uk/international_airlines_group/rns/regulatory-story.aspx?cid=2457&newsid=1536966

[AMcWhirter]

Hello transtraxman,

In fact Mark Caswell reported on this development yesterday – see below.

IAG set to terminate Air Europa deal

[Johnnyg]

Irrespective that Air France-KLM has announced an order for 100 Airbus A320 neo family aircraft, along with purchase rights for an additional 60 planes, Personally I wonder whether they could afford it.

[BackOfThePlane]

Frankly, it was always a ridiculous idea……

[transtraxman]

Another piece of news about Air Europa.
“Madrid mulls stake of up to 40% in Air Europa – report”. (ch-aviation 17-1-22)

https://www.ch-aviation.com/portal/news/111652-madrid-mulls-stake-of-up-to-40-in-air-europa-report

Basically this says that the Spanish Gov. could take up to 40% of a shareholding in AE in lieu of payback of the loans already made. It does not want the airline to fail but wants to maintain competition on Latin American routes. That would not hinder IAG taking a minority stake in the airline – probably to keep others out. It was also ackowledged that the European Competition authorities might not be convinced so the deal might not come off.

Air Europa is in dire straits at the moment and could go under at any moment. Does that not place the loans already made out to the airline at risk, whether they are capitalised or not? Can the European Authorities approve such a deal?

[transtraxman]

So the Air Europa saga continues…….
First, IAG offers €1000 million in No. 2019
By a year later the situation had changed (pandemic etc.) and a new price is negotiated of €500 million.
Then Dec. 2021 the two parties agree to end the agreement with IAG paying compensation.

Now, “IAG “remains convinced” about Air Europa deal,” (Business Traveller, 18-03-22)

IAG “remains convinced” about Air Europa deal

The €100 million “loan” to be paid by IAG for a possible 20% stake in Air Europa values the airline at €500 million. Considering the difficulties through which Globalia and its airline are going, this sum is extremely excessive. This is more true when the conditions of takeover are known in detail. However, we know that IAG within and without Spain where they compete, IAG will have to hand over slots for these routes to be flown by other airlines. We already know that Volotea has been offered quite a few of these for flights within Spain.

IAG should forget about Air Europa and its idea of trying to dominate at Madrid Barajas. It should increase its market share by better service and correct most of the short comings noted on this forum. There are areas in Europe where IAG is underrepresented so should think about expanding in those areas helped by a merger or takeover of a well-run and ambitious airline together with the people running it. This way you get new blood into the company which should give IAG the boot up the backside which it needs.

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