British Airways owner’s purchase of Air Europa under scrutiny by watchdog

IAG acquired Spain’s third largest airline in a deal worth £420 million

A deal worth £420 million in which British Airways owner IAG acquired Air Europa is being scrutinised by the UK's competition watchdog. Reuters

Britain’s competition watchdog is examining the takeover of Air Europa by British Airways owner IAG and considering launching a formal investigation into the deal.

The Competition and Markets Authority (CMA) said it is looking at whether the acquisition could lead to a substantial reduction of competition in the UK.

IAG in 2019 first announced plans to buy Air Europa from Globalia, a Spanish tourism group, for £840 million ($1.12 billion).

The price tag was later slashed to £420 million after the Covid-19 pandemic battered the aviation industry, grounding most flights.

Previously, Air Europa was the third largest carrier in Spain, after IAG and Ryanair.

Before the coronavirus crisis took hold, Air Europa operated flights to 62 destinations in Europe and South America.

IAG bosses have already offered concessions to EU antitrust bodies over the deal, although the details have not been made public.

A European Commission investigation was launched in June over concerns that the plans would reduce competition on Spanish domestic routes and international routes to and from the country.

IAG already owns Iberia and under the deal it would buy Air Europa on behalf of IAG, but trade unions and rival carriers have raised concerns.

“We will collaborate with the CMA,” IAG said in a statement.

“The London-Madrid route is highly competitive and is already part of the European Commission [investigation] process.”

The CMA said it will make a decision by January 19 on whether to launch a formal investigation.

The news comes as British Airways is in the process of rehiring cabin crew after laying off thousands of workers because of the pandemic.

The airline declined to specify how many people it wanted to bring on board but reports suggested it was planning to hire up to 3,000 people.

The move came after the airline came up against harsh criticism for its decision last year to make 4,700 cabin crew redundant.

Unite general secretary Sharon Graham said the creation of new jobs suggests “there was never any need to sack thousands of dedicated BA staff”.

The industry has in recent months shown tentative signs of returning to normal as travel restrictions were lifted and borders reopened.

Earlier this month, British Airways and Virgin Atlantic marked the return of UK-US direct flights with a historic dual take-off from Heathrow Airport in west London.