Europe's trend toward airline consolidation has taken one step backward, with International Airlines Group calling off its planned takeover of Air Europa, blaming the move on concession demanded by EU regulators.
Several rounds of concessions had been offered, but the airline group says that further requirements by competition regulators would make the deal unprofitable.
IAG is the parent of Spain's two largest airlines, Iberia and Vueling; Air Europa is number three. IAG had argued that the merger, with Air Europa still operating as a separate brand, would allow Madrid to compete with other major hubs such as Amsterdam, Paris and London, and would allow Spain to become a base for flights to Asia. The deal had the support of the Spanish government.
This was actually the second attempt at a deal; IAG had originally planned to buy Air Europa in 2019 for €1 billion, but the deal collapsed with the pandemic, leaving IAG owning 20% of Air Europa, a share it says it will hold onto. The second deal, announced in February, 2023 dropped the price to less than half.
IAG, along with Lufthansa and Air France/KLM are expected bidders for TAP Portugal, nationalized during the pandemic and which Portugal wants to privatize. Lufthansa recently got approval for acquisition of Italy's ITA Airlines, and Air France/KLM has taken control of SAS Scandinavian.
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