Updated: IAG agrees to acquire all of Air Europa

jcm165 · Mon Nov 04, 2019 7:42 am

What are your thoughts? Madrid would be an even stronger hub to South America.

Link only in spanish so far:

https://www.google.com/amp/s/www.abc.es ... a_amp.html

mercure1 · Mon Nov 04, 2019 7:46 am

IAG press release

https://www.iairgroup.com/en/newsroom/p ... air-europa

Technically it’s Iberia that agreed to acquire Air Europa

Personally I hope competition authorities look at this carefully.

Ishrion · Mon Nov 04, 2019 7:48 am

Woah... that's huge.

I assume they'll leave SkyTeam?

chunhimlai · Mon Nov 04, 2019 7:49 am

I think UX brandname is more suitable than level/vueling for inter europa LCC

Btw how do they operate in MAD after takeover?

factsonly · Mon Nov 04, 2019 7:51 am

Seismic strategic shock, equal to DL buying LATAM.

OneWorld hits out at SkyTeam, after SkyTeam hit out at OneWorld.

aviationaware · Mon Nov 04, 2019 7:53 am

Strongly opposed to this. I hope the European Commission does its job and does not allow this to proceed. The Europe - Latin America market would be far too concentrated.

seahawk · Mon Nov 04, 2019 7:54 am

Hmm, if that goes ahead one will hardly be able to stop LH from getting Condor. IAG would gain total dominance in Spain.

Ishrion · Mon Nov 04, 2019 8:00 am

factsonly wrote:
Seismic strategic shock, equal to DL buying LATAM.

OneWorld hits out at SkyTeam, after SkyTeam hit out at OneWorld.

Technically OW hit SkyTeam with CZ, ST hit back a year later, and now OW hits back again, lol.

FromCDGtoSYD · Mon Nov 04, 2019 8:00 am

And another EU hub becomes a monopoly... what happened to the proposed JV with AF/KLM

SCQ83 · Mon Nov 04, 2019 8:02 am

Speechless!

On the other hand it makes sense. Madrid doesn’t need two carriers serving the same markets.

Scotron12 · Mon Nov 04, 2019 8:05 am

Im sure IAG have scrutinized the regulatory rules before making the offer.

smi0006 · Mon Nov 04, 2019 8:05 am

SCQ83 wrote:
Speechless!

On the other hand it makes sense. Madrid doesn’t need two carriers serving the same markets.

Surely it does from a consumer perspective? Does this add much value to IB, except removing competition?

RyanairGuru · Mon Nov 04, 2019 8:09 am

Madrid is not a capacity constrained market, unlike LHR, FRA, AMS etc. Anyone can set up an operation there quite easily, so it is hard to see what real competition concerns there are. I expect that much like BA acquiring BD and LH acquiring the majority of AB's assets, this will be approved.

SCQ83 · Mon Nov 04, 2019 8:10 am

smi0006 wrote:
SCQ83 wrote:
Speechless!

On the other hand it makes sense. Madrid doesn’t need two carriers serving the same markets.

Surely it does from a consumer perspective? Does this add much value to IB, except removing competition?

UX is quite irrelevant for the domestic / Euro market with plenty of competition (easyJet, Ryanair, Euro legacies)

Some LatAm markets might now have less competition, but Latin American carriers are also becoming more competitive.

Aisak · Mon Nov 04, 2019 8:16 am

RyanairGuru wrote:
Madrid is not a capacity constrained market, unlike LHR, FRA, AMS etc. Anyone can set up an operation there quite easily, so it is hard to see what real competition concerns there are. I expect that much like BA acquiring BD and LH acquiring the majority of AB's assets, this will be approved.

What is true for MAD is untrue for “the other end”.

Think of AMS, EZE, JFK (slot controlled), LGW.... they might be forced to offer the equivalent of UX slots to competition....

NYCVIE · Mon Nov 04, 2019 8:16 am

RyanairGuru wrote:
Madrid is not a capacity constrained market, unlike LHR, FRA, AMS etc. Anyone can set up an operation there quite easily, so it is hard to see what real competition concerns there are. I expect that much like BA acquiring BD and LH acquiring the majority of AB's assets, this will be approved.

Not really comparable situations since AB was bankrupt and on its way out and BD was similarly on its last legs. UX AFAIK is not at risk of imminent collapse.

Thibault973 · Mon Nov 04, 2019 8:18 am

SCQ83 wrote:
Speechless!

On the other hand it makes sense. Madrid doesn’t need two carriers serving the same markets.

Yes it does, just take a look at the sky high prices on monopoly routes to South America from MAD. This is an extremely bad news for consumers, especially for the huge South American community in Madrid.

RyanairGuru · Mon Nov 04, 2019 8:19 am

Aisak wrote:
RyanairGuru wrote:
Madrid is not a capacity constrained market, unlike LHR, FRA, AMS etc. Anyone can set up an operation there quite easily, so it is hard to see what real competition concerns there are. I expect that much like BA acquiring BD and LH acquiring the majority of AB's assets, this will be approved.

What is true for MAD is untrue for “the other end”.

Think of AMS, EZE, JFK (slot controlled), LGW.... they might be forced to offer the equivalent of UX slots to competition....

But every single one of those routes has at least one other competitor.

LHR is a much more closed market, but BA only had to make slots available for a new competitor on routes where BA and BD were the only airlines and that became a monopoly. I can't think of single route to a heavily slot controlled airport where IB and UX were the only two airlines.

Scotron12 · Mon Nov 04, 2019 8:20 am

According to WIKI, they also have 22 737MAX on order. This will fit right in with the 200 IAG LOI in Paris.

That is if it's flying.

scbriml · Mon Nov 04, 2019 8:26 am

factsonly wrote:
Seismic strategic shock, equal to DL buying LATAM.

Except DL didn't buy LATAM in the way that IAG is buying Air Europa.

vhtje · Mon Nov 04, 2019 8:36 am

seahawk wrote:
Hmm, if that goes ahead one will hardly be able to stop LH from getting Condor. IAG would gain total dominance in Spain.

Hardly. Ever heard of EasyJet and Ryanair?

albertocsc · Mon Nov 04, 2019 8:40 am

This also makes me think a bit about some questions, like:
- Will their domestic plans for Brazil still go on?
- Would Air Europa Express be included in the sale? (Technically is a complete different company but works in almost complete integration with UX).
- Do you think Iberia would take over thinner South America routes such as IGR, COR or ASU or just drop them?

Waterbomber2 · Mon Nov 04, 2019 8:44 am

Competition authorities will approve this, don't worry.
Personally, if I were IAG and had a billion to waste, I wouldn't have wasted it on Air Europa but Thomas Cook.
Having an in-house sales network across Europe would have made far more sense and would have made BA and its partners so much stronger.

What do they get with Air Europa? Less competition for sure, but someone will happily fill the gap. There still is a vast amount of competition, from Tap to Latam.
It's a waste of a billion IMHO.

vhtje · Mon Nov 04, 2019 8:45 am

FromCDGtoSYD wrote:
And another EU hub becomes a monopoly... what happened to the proposed JV with AF/KLM

According to the IAG press release, UX will join the existing IAG JVs - I take this to mean the BA/IB/AY/AA TATL JV.

IAG Press Release wrote:

In addition, the Acquisition is expected to generate significant revenue synergies by 2025, including:

* Adding reciprocal intra-group codeshares across all connecting gateways;
* Adjusting timings to maximise connectivity through the Madrid hub;
* Aligning commercial policies and integrating sales forces in home markets;
* Integrating Air Europa into existing IAG joint businesses; and
* Integrating Air Europa into the Avios currency for loyalty.

santi319 · Mon Nov 04, 2019 8:49 am

This sounds like IB would be like LX and UX will be like Edelweiss?

seahawk · Mon Nov 04, 2019 8:51 am

vhtje wrote:
seahawk wrote:
Hmm, if that goes ahead one will hardly be able to stop LH from getting Condor. IAG would gain total dominance in Spain.

Hardly. Ever heard of EasyJet and Ryanair?

Since when do they fly long haul?

VSMUT · Mon Nov 04, 2019 8:52 am

aviationaware wrote:
Strongly opposed to this. I hope the European Commission does its job and does not allow this to proceed. The Europe - Latin America market would be far too concentrated.

The Spanish domestic and Spanish to European markets will be severely affected as well. This is bad for the competition. The EU needs to set a stopper for this takeover.

SXDFC · Mon Nov 04, 2019 8:53 am

Does this mean Iberia will operate the 737 and 787?

onwFan · Mon Nov 04, 2019 8:58 am

I was definitely expecting this, but not so soon! IAG sought to buy UX last year but that dropped it. But with IAG having troubles getting their JV with Latam approved, this was their best bet at fighting AF/KL on Europe-Latin America. And there was no way an AF/KL/UX/LA JV partnership would have be approved. AF/KL is larger than IAG and UX is larger than LA on Europe to Latin America.

As for competition, now both LA and Plus Ultra are competitors.

Flying Belgian · Mon Nov 04, 2019 9:00 am

Fares will soar again on the EU-Latin America market, and I don't think EU Commission can do anything about it...

migair54 · Mon Nov 04, 2019 9:01 am

albertocsc wrote:
This also makes me think a bit about some questions, like:
- Will their domestic plans for Brazil still go on?
- Would Air Europa Express be included in the sale? (Technically is a complete different company but works in almost complete integration with UX).
- Do you think Iberia would take over thinner South America routes such as IGR, COR or ASU or just drop them?

Since LATAM is leaving OneWorld, I think it's more necessary than before, it will be a very big market without a good partner, the non stop to Brazil from MAD with IB and UX they will really need someone to feed the flights in that end.

I am sure Air Europa express will be in the pack, and I won't be surprise if that airline disappear in the near future and is replaced by Air Nostrum flights and Vueling.

The move is very clever but we have to see what the EU says about this, maybe the monopoly is too big, but I don't think so. They will have to realign the schedules and we will see some cancelations and most probably some new flights, It is going to be interesting to see how they manage the fleets and the destinations.

JumboMaiden · Mon Nov 04, 2019 9:04 am

Good. Maybe they are in need of a new boss, I can think of one at Heathrow who would be an easy shift.

onwFan · Mon Nov 04, 2019 9:08 am

Also, perhaps with its lower costs and different fleet, Air Europa could be a good platform for IAG to fold their low cost long/short haul/Level into.

VanBosch · Mon Nov 04, 2019 9:08 am

The IAG press release says the brand will be kept independent initially. I think there are too many brands so wonder would this merge with Level?

310815 · Mon Nov 04, 2019 9:12 am

onwFan wrote:

As for competition, now both LA and Plus Ultra are competitors.

LATAM certainly is. But Plus Ultra? You gotta be kidding. They offer 2 weekly flights from Madrid to South America. This is no serious competitor to IB and UX that have I don't know maybe 25 daily flights.

OmerMaz · Mon Nov 04, 2019 9:24 am

This seems like too much of a retaliation considering the DL\LA deal; an entire airline group purchasing an additional airline compared to an airline buying a curtain stake.

I'm also wondering how things will be sorted out fleet wize.

OGLOBAL · Mon Nov 04, 2019 9:25 am

i hope it never gets approved . i am suma gold and i try to fly mostly with sky team ..

vhtje · Mon Nov 04, 2019 9:31 am

seahawk wrote:
vhtje wrote:
seahawk wrote:
Hmm, if that goes ahead one will hardly be able to stop LH from getting Condor. IAG would gain total dominance in Spain.

Hardly. Ever heard of EasyJet and Ryanair?

Since when do they fly long haul?

You didn't mention long haul. You wrote "total dominance". I was countering that assertion: every time I visit a Spanish airport, all I see are aprons are dominated by orange and white Airbuses and cláirseaches/Celtic harps on 737s.

This website aggregates Spanish aeronautical statistics. On passenger numbers, Ryanair and easyJet easily dominate.

http://www.aena.es/csee/Satellite?c=Pag ... tadisticas

Aisak · Mon Nov 04, 2019 9:38 am

SCQ83 wrote:
UX is quite irrelevant for the domestic / Euro market with plenty of competition (easyJet, Ryanair, Euro legacies)

Some LatAm markets might now have less competition, but Latin American carriers are also becoming more competitive.

While I agree there are some domestic routes that are really no competition for IB (like MAD-BCN which is like 2xdaily vs. 20xdaily on IAG-IB-VY) some routes to the Islands, quite sensitive to competition are huge.

On Canaries routes, UX even deploys widebodies. PMI is also huge for UX since their HQ is located there. Norwegian is in the procees of leaving MAD-PMI- And Ryanair is just closing its bases in Canaries while Norgewian just turned 180 degrees and maintains the Canaries.

onwFan · Mon Nov 04, 2019 9:49 am

JKPhotos wrote:
onwFan wrote:

As for competition, now both LA and Plus Ultra are competitors.

LATAM certainly is. But Plus Ultra? You gotta be kidding. They offer 2 weekly flights from Madrid to South America. This is no serious competitor to IB and UX that have I don't know maybe 25 daily flights.

On another note, this signals that IAG is not interested in proceeding with the Latam JV, leaving them with AF/KL. I guess this means LA loses its stronghold in both MIA and MAD.

On the broader Europe-South America market, I guess AF/KL/LA will still be larger than IAG.

frigatebird · Mon Nov 04, 2019 9:49 am

scbriml wrote:
factsonly wrote:
Seismic strategic shock, equal to DL buying LATAM.

Except DL didn't buy LATAM in the way that IAG is buying Air Europa.

That is true. Will be interesting to see what EU regulators will say. Iberia, Air Europa, Vueling, Level, all under one ownership. Sure they'll have a very close look.

Wonder what this will mean for UX' relationship with KL. UX has grown so much at AMS they have to send their widebody aircraft to meet demand (A332/788/789).
Codeshare with KL won't be terminated quickly, but eventually I can see KL having to tie up with LA, perhaps expanding their routes to Soth America.

onwFan wrote:
Also, perhaps with its lower costs and different fleet, Air Europa could be a good platform for IAG to fold their low cost long/short haul/Level into.

VanBosch wrote:
The IAG press release says the brand will be kept independent initially. I think there are too many brands so wonder would this merge with Level?

Interesting thoughts, would make sense to me.

SXDFC wrote:
Does this mean Iberia will operate the 737 and 787?

No, but I can see a consolidation of Air Europa and Level operating an all Boeing fleet. UX was already phasing out their A330s, and Level deciding between 787 or A330neo as future longhaul aircraft.

devron · Mon Nov 04, 2019 9:53 am

Knowing the EU commission a bit this will not fly as a simple takeover. They will need to divest routes to south America with potentially relevant feeder flights.

SCQ83 · Mon Nov 04, 2019 9:58 am

I can’t see short haul operations being kept, unless it is just costs are lower than Iberia Express or Vueling. Otherwise routes like MAD-PMI might end having Iberia Express, Vueling and Air Europa.

dfdubflyer · Mon Nov 04, 2019 9:59 am

I’m sure marketing experts with far more experience than me can study this for IAG but AirEuropa seems like a quite neutral name for them to fold Vueling and Level ops into potentially. Some on this site believe the Vueling name is tarnished and Level was always a meaningless blank canvas of a brand.

Does T4/T4S have capacity to pick up Air Europa ops eventually, or, would they want to keep those separated for the more leisure/package holiday crew? From what I recall transferring from T123 and T4 required exiting security and taking a bus to T4. Then again I’ve only flown AirEuropa once from BOS-MAD and it was a rough enough experience I would would go out of my way to avoid them

I would wonder if the competition authority could really say much as MAD isn’t slot limited and IAG will certainly be able to show that the Spanish aviation market is heavily fragmented

charliecossie · Mon Nov 04, 2019 10:00 am

Waterbomber2 wrote:
Competition authorities will approve this, don't worry.
Personally, if I were IAG and had a billion to waste, I wouldn't have wasted it on Air Europa but Thomas Cook.
Having an in-house sales network across Europe would have made far more sense and would have made BA and its partners so much stronger.

What do they get with Air Europa? Less competition for sure, but someone will happily fill the gap. There still is a vast amount of competition, from Tap to Latam.
It's a waste of a billion IMHO.

BA already has an in-house sales network across Europe.

LupineChemist · Mon Nov 04, 2019 10:05 am

I've long said the 787 makes a lot of sense at IB especially for longer thin routes where they're using the 332 right now.

Also, IB makes a ton of money from their MROs and being able to service other airlines Boeing fleets would be a huge plus.

I'm curious if there will be a terminal shuffle and they'll move to T4.

txangu · Mon Nov 04, 2019 10:20 am

I remember now that Iberia was having difficulties to prove they were moreSpanish than British in view of the port-Brexit. Without knowing the details on the new shares, this move would probably fix their concerns

aircatalonia · Mon Nov 04, 2019 10:24 am

IAG is putting a lot of eggs in the Spanish basket. In fact the article says that the operation is to be completed the second half of next year so they still have time to back down.

dfdubflyer · Mon Nov 04, 2019 10:25 am

Investor presentation on the acquisition:

https://www.iairgroup.com/~/media/Files/I/IAG/documents/20191104%20-%20Air%20Europa%20analyst%20presentation.pdf

I didn't realize quite how large AirEuropa was EU-SA compared to Iberia (doubles their size it says!), and was also trying to figure out what the other 30% share was between SA/Caribbean and Europe. Holiday carriers, Norwegian, and Turkish? Nice new fleet of 787s included in this deal as well should they decide they want to reallocate some of the capacity out of Madrid.

SelseyBill · Mon Nov 04, 2019 10:48 am

LupineChemist wrote:
I've long said the 787 makes a lot of sense at IB especially for longer thin routes where they're using the 332 right now.

........or they may just shift the 787's to BA/LHR and keep Spain all-Airbus. Who knows?

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