British Airways parent International Airlines Group (IAG) has finally pulled the plug on its bid to acquire Air Europa.
IAG said it wasn’t likely to be approved in the current ‘regulatory environment.’
Air Europa is Spain’s second largest airline.
The European Commission had already voiced concerns about the airline acquisition as IAG also owns Iberia.
It would have given IAG a dominant position on several routes, especially from Madrid.
IAG would have had a large market share on flight between Spain and Latin America.
Iberia loaned Air Europa funds to help it survive the pandemic downturn.
It then converted these funds to a 20% stake.
IAG then agreed to purchase the remaining 80%.
The European competition regulator opened an investigation and made it clear there were serious competition issues, that would likely mean giving up some routes and slots.
IAG must now pay a €50 million ‘kill fee’ to Air Europa as compensation, but says it will retain its existing 20% shareholding.
