IAG has proposed to the European Commission (EC) six airlines to take over the routes it has to give up as part of the eventual purchase of Air Europa. The companies that have formally shown their interest and are in talks with are Ryanair and Binter, for short flights, and the Spanish Iberojet and World2Fly and the Colombian Avianca for long-haul flights.
The CEO of IAG, Luis Gallego, explained yesterday during the presentation of the first quarter results that the conversation with these airlines is open and he was confident that the proposal will succeed in convincing Brussels. The Commission published a document of “objections” to the merger operation of the Globalia airline with Iberia a few weeks ago.
Brussels considered that the initial plan proposed by the buyer may have adverse effects on competition on several routes, both between Europe and Latin America and on flights between the Peninsula and the Balearic Islands and the Canary Islands. This, the EC concluded, could harm consumers through an increase in the price of plane tickets.
Now IAG considers that these airlines could take over 40% of the routes that Air Europa operated last year and that they are an essential part of its offer to facilitate the operation, which has been in the process for already five years, pandemic including
The president of IAG did not specify the routes that each of these airlines would undertake, beyond that half only operate short and medium-long flights, and the rest, intercontinental. In any case, the companies have already been putting their cards on the table to get a piece of the pie. Ryanair has already expressed its desire to take flight rights (slots) to Madrid, Barcelona, ??the Balearic Islands and the Canary Islands. Volotea, which is working on its IPO, has stated that it has no preference for specific routes or destinations, although they are “ready” to cover all the short and medium-haul routes that the Commission decides. Even so, they have identified the slots that would most benefit their growth strategy, vital to convince investors in a future jump to the parquet floor. Specifically, those who can be released in Madrid and in connections from the Peninsula to the islands.
IAG has until June 15 to present to the European Commission all the information required for this operation, but this institution has the ability to apply the mechanism called stop the clock if it needs to collect additional data, a common occurrence in operations of this dimension. Gallego added that they continue to work with the EC with the aim of concluding a “balanced” agreement that “sufficiently protects competition” and allows Madrid-Barajas to become “the great hub of southern Europe that it should be”.
IAG recorded losses after taxes of 4 million euros in the first quarter of 2024. It thus cuts the red numbers compared to the same period of the previous year, when it left 87 million. Iberia and British Airways have been the airlines that have improved the group’s results, with high operating profits. Vueling and Aer Lingus, although cutting losses, remain in the red in the first quarter. The group attributed Vueling’s losses to the nature of its business model, which is more focused on the holiday period. The reduction in losses, according to the holding, is the result of the deseasonalization process applied by the airline some time ago.
Regarding the recovery of the dividend distribution, the CEO hopes that it will be a reality “soon”, but first he wants to make sure that, if it comes, he can “maintain it over time”.
