IAG eyeing Korea and ITA for Air Europa

MAG announced yesterday that it had already presented its proposal to reschedule flights to obtain approval for the acquisition of Air Europa. The Spanish-British team is processing its case in parallel with two other concentrations in the same sectorwhich will give you an idea of ​​the requirements of the competition.

These two cases are merger of Korean companies Korean Air and Asiana and purchase of ITA – Alitalia’s successor – Lufthansa. These are very different operations, but it is important to know what could happen to the two Spanish companies.

The concentration of the two Asian airlines was authorized on 13 February. given that compliance with various conditions (Facilities). In passenger transport it is required that Korean is providing the necessary assets to rival T’Way to operate on four overlapping routes in Europe.which connect Seoul with Barcelona, ​​Paris, Frankfurt and Rome.

The merchandising directly asked him to “get rid of” the Asian business, which includes aircraft, personnel, rights and contracts. In addition, Brussels must approve the name of the buyer of this activity to whom it requests “incentives” for running this business viable and competing with the Korean one.

The presence of Korean and Asian companies in Europe is modest compared to Lufthansa, ITA, Iberia and Air Europa.

Brussels is also reviewing the purchase of the former Italian airline by the main German group in its sector. Department under the direction of the Commissioner Margrethe Vestager opened an exhaustive investigation, identifying five main areas of concern: reduced competition on routes between Italy and Central Europe, where only Ryanair will remainwhich “operates from remote airports”; should ITA and Lufthansa’s North American operations, along with those of their partners United and Air Canada, be understood as a single entity?; That reduced competition in corridors with India, Japan and the aforementioned North America; That “creating or strengthening” ITA’s dominant position at Milan Linate Airport; And possible negative effect that concentration may have on ITA’s agreement with other airlines to reallocate passengers of those who fly short-haul flights on this aircraft. This operation is interesting for IAG in that it is processed a month in advance, although this does not guarantee that the end (positive or negative) will come sooner or later as the timing is flexible.

Merge cleared

Added to these two processes, although in the field of telecommunications, MasMovil and Orangewhich the European Commission approved on February 20, also subject to conditions. Almost 24 months passed from announcement to completion.

In case of IAG offer Facilities It was sent last Friday. The group led by Luis Gallego already owns 20% of Air Europa shares and wants to reach 100%. in a transaction that values ​​the acquired company at 500 million (without debt). The deadline for Brussels to approve or cancel the purchase ends on June 7, but a decision is expected to be made in the second half of the year. The operation was announced on February 23, 2023 (there was an unsuccessful attempt, interrupted in 2021).

New competition

“Our proposal for Facilities very ambitious, answers the Commission’s questions and guarantees the emergence of new competitors on a large number of routes,” IAG reported yesterday.

In January, the Commission mentioned the “possibility of reduced competition” on three types of routes: national non-alternative by train and between the peninsula and the two archipelagos; medium-haul connections between Madrid and major European cities, Israel and Morocco, as well as intercontinental corridors with America on non-stop routes.

IAG considers this purchase necessary so that Barajas can become center intercontinentalon par with Paris, Frankfurt or Amsterdam (London is not mentioned), but it has The downside is that the operating result of Iberia and Air Europa is much better than the first attempt.