MIflyer12 wrote:

zkojq wrote:

Good news for consumers. Allowing such monopolistic behavior of the intended merger is never good for competition.

I like competition, but there is no competition by Air Europa if it gets liquidated. You can't wish a 2nd network carrier into a market that won't support it: see Mexico, Australia, or Canada.

To be fair Canada does have two network carriers technically and I think Air Europa can still work.

Now the Spanish government is considering taking a 40% equity stake in Air Europa, including a potential joint deal with IAG to acquire a stake in the airline.

Apparently this option already exist, whereby the Spanish state has the option of converting its previously provided economic aid and loans into equity in the airline.

https://www.aviacionline.com/2022/01/th ... ir-europa/

https://www.bloomberg.com/news/articles/2022-01-14/spain-is-said-to-weigh-air-europa-stake-in-revised-deal-with-iag

According to Bloomberg, the Spanish Government would hold 40% of UX, IAG holding the majority, with the existing owner, the Hidalgo family, left with a "small holding".

I don't get what's in it for IAG with that structure. It implies that the Spanish Government is getting 40% for the loans it already made, so therefore the Spanish Government wouldn't be putting more money in. Presumably IAG would stump up extra funds.

The only benefit I can see is that that then means UX don't have to repay the loans that have been made. But with all the control issues split ownership would have, and the European competition watchdog breathing down their neck, I do not see how IAG can make this work for them.

vhtje wrote:

https://www.bloomberg.com/news/articles/2022-01-14/spain-is-said-to-weigh-air-europa-stake-in-revised-deal-with-iag

According to Bloomberg, the Spanish Government would hold 40% of UX, IAG holding the majority, with the existing owner, the Hidalgo family, left with a "small holding".

I don't get what's in it for IAG with that structure. It implies that the Spanish Government is getting 40% for the loans it already made, so therefore the Spanish Government wouldn't be putting more money in. Presumably IAG would stump up extra funds.

The only benefit I can see is that that then means UX don't have to repay the loans that have been made. But with all the control issues split ownership would have, and the European competition watchdog breathing down their neck, I do not see how IAG can make this work for them.

And 40% is a lot, I do not see this deal in any way or form come to fruitition. Having the government on board also means that politics will influence decision making. The government will do everything to look good, cuts to workforce or other things that leave the employees worse off will be very hard to get through. Fleet renewals? Are there not many Spanish Jobs at stake if it is not an Airbus order? And this will be just the begining. If the politicians have one foot in the door, they will want more.

I am not an IAG share holder but if I would be, then I would protest against that deal.

Unless the Spanish Government has a golden share then they won't have controlling interest so IAG can do what they wanted as 40% well be less than IAG's nearly 60%. What's the problem?

The IAG holding would be 49%.

JA wrote:

The IAG holding would be 49%.

That seems risky. I wouldn't do it.

Air Europa founder Juan Jose Hidalgo says the sale of the carrier is not a sure thing, and Globalia the parent of UX is prepared to carry on with a standalone business plan.

He says since the previous IAG/Iberia agreement is null and void, any negotiations would start from scratch, but feeks doubtful an alternate agreement will be reached.

Instead, the carrier has a business plan until 2026 that it can pursue. While the state does have rights to covert loans into equity, he seems to also feel so long as the company makes its required payments this was not the most likely outcome.

https://holanews.com/juan-jose-hidalgo- ... sin-nadie/
https://www.hosteltur.com/149417_juan-j ... mulas.html

Air Europa seeking Iberia pay additional EUR 100+million compensation. This would be in addition to the previous EUR 75 mil disbursed for failing to finalize the takeover.

https://www.reportur.com/aerolineas/202 ... o-de-nada/

In some ways this is a more damaging outcome than if IAG had been 'allowed' to buy AirEuropa. They're quite a cunning lot at IAG and I think this makes it inevitable that AE will end up in the IAG stable, or bankrupt. Certainly no industry partner will touch them with a bargepole and any private equity requires IAG to play along.

I can imagine a scenario where AE continues to loose money, with IAG offering incredibly attractive fares on AE routes, to ensure that happened. The EU/UK competition authorities have let AE wind up in a worse position than before by disallowing IAG to buy AE, when the money runs out no-one but IAG can save it, which the EU/UK may disallow. By default IAG will have the entire market to itself anyway and investors and employees will be out of pocket.

IAG have agreed a €100m convertible bond to Globalia, which could convert into a 20% stake in Air Europa

https://otp.tools.investis.com/clients/uk/international_airlines_group/rns/regulatory-story.aspx?cid=2457&newsid=1561612

I wonder with this investment whether IAG will have influence over the network strategy of UX? For example, bringing in more complementarity of routes rather than competing on the same old trunk routes?

Could the mods change the title in reinclude the name Air Europa in it? Globalia isn't a well known name.

this is going nowhere. I suspect AE will never operate in its current guise under the IAG umbrella

onwFan wrote:

I wonder with this investment whether IAG will have influence over the network strategy of UX? For example, bringing in more complementarity of routes rather than competing on the same old trunk routes?

Why advocate a sly way to avoid a competition review and destroy competition in the industry?

MIflyer12 wrote:

onwFan wrote:

I wonder with this investment whether IAG will have influence over the network strategy of UX? For example, bringing in more complementarity of routes rather than competing on the same old trunk routes?

Why advocate a sly way to avoid a competition review and destroy competition in the industry?

I am not advocating anything. I am just thinking how this makes sense from IAG’s point of view. They can’t be sinking money into UX for no reason.

onwFan wrote:

MIflyer12 wrote:

onwFan wrote:

I wonder with this investment whether IAG will have influence over the network strategy of UX? For example, bringing in more complementarity of routes rather than competing on the same old trunk routes?

Why advocate a sly way to avoid a competition review and destroy competition in the industry?

I am not advocating anything. I am just thinking how this makes sense from IAG’s point of view. They can’t be sinking money into UX for no reason.

The reason is this protects IB. The investment makes at the very least makes it much more difficult for a competitor (eg AF/KL) to take over UX and launch a stronger, more legitimate, competitive assault against IB. IAG is ensuring a weak number 2 airline is around. Long term after market has recovered can reassess a new takeover attempt.

I have sketched out a potential solution for this issue, but I am having doubts on whether there is any interest in an actual commercial solution. This entire process is extremely strange. It is clear that JJH knows the environment much better than I do.

UX is pondering if they should declare bankruptcy in April. In Spanish: https://www.preferente.com/rss1/valenti ... 16778.html

UX says it reached an agreement with ground and cabin crew unions to extend the ongoing pandemic working rules covering 4,000 staff till September 30.
The airline will operate fleet of 35 aircraft, down from 60 in 2019, with plans to grow to 41 aircraft by end of 2022.

https://www.arabalears.cat/economia/air ... 19199.html

IAG still wants Air Europa but deal may take 18 more months

"IAG International Airlines Group still intends to take full ownership of Air Europa (UX, Palma de Mallorca), but the protracted deal is likely to take at least another 18 months to complete, the group’s chief executive Luis Gallego commented at an economic forum in Madrid on April 6.

"the aim of a tie-up is to give Spain the opportunity to turn Madrid Barajas into one of the biggest hubs in Europe and the largest in southern Europe"

https://www.ch-aviation.com/portal/news ... ore-months

In the meantime UX leasing in 4 787s from Norse for a 18-month period.

https://www.marketwatch.com/story/norse ... 1649746755

Iberia says it expects to receive the Ministry of the Treasury and State Finance Agency authorization to take stake in Air Europa by the fall and in the interim is providing loan of EUR€100 million which can be convertible into 20% of the capital of the Globalia-owned airline.

https://www.flightglobal.com/strategy/i ... 44.article

Air Europa has a new CEO - Jesús Nuño de la Rosa

The appointment was agreed between Air Europa and the State Society for Industrial Participations (SEPI).

“The new CEO joins Air Europa at a decisive moment for the future of the company, after the agreement with Iberia that has formalized a convertible loan of 100 million euros“, Globalia, the tourist group that owns the company, highlighted. through a statement.

https://aerolatinnews.com/destacado/jes ... ir-europa/

IAG concluded the value of Air Europa is 40% less than initially agreed as parties continue to negotiating for the remaining 80% stake in the company.
Obviously IAG is looking to wrestle a further discount in the deal...

https://www.ch-aviation.com/portal/news ... ropa-by-41

IAG, the owner of British Airways and Iberia, has taken a 20% stake in Spanish airline Air Europa after converting an unsecured loan.

https://www.aerotime.aero/articles/3191 ... air-europa

Funny the picture shows an Air Europa A330 even though they got rid of theif last ones 2021.

But I wonder if the competition authorities will have a look at this?
As IAG have a pretty package of 3 Spanish airlines with Iberia, Vueling and now Air Europa..
What else is there in Spain? Easyjet and Ryanair?

ReverseFlow wrote:

Funny the picture shows an Air Europa A330 even though they got rid of theif last ones 2021.

But I wonder if the competition authorities will have a look at this?
As IAG have a pretty package of 3 Spanish airlines with Iberia, Vueling and now Air Europa..
What else is there in Spain? Easyjet and Ryanair?

20% is not a controlling interest.

9252fly wrote:

ReverseFlow wrote:

Funny the picture shows an Air Europa A330 even though they got rid of theif last ones 2021.

But I wonder if the competition authorities will have a look at this?
As IAG have a pretty package of 3 Spanish airlines with Iberia, Vueling and now Air Europa..
What else is there in Spain? Easyjet and Ryanair?

20% is not a controlling interest.

But surely enough to get somebody on the board?

ReverseFlow wrote:

9252fly wrote:

ReverseFlow wrote:

Funny the picture shows an Air Europa A330 even though they got rid of theif last ones 2021.

But I wonder if the competition authorities will have a look at this?
As IAG have a pretty package of 3 Spanish airlines with Iberia, Vueling and now Air Europa..
What else is there in Spain? Easyjet and Ryanair?

20% is not a controlling interest.

But surely enough to get somebody on the board?

Yes, although 20% probably only gets you 1 seat. With your 1 seat and vote, it's akin to being a fly on the wall, you get to have your say and know how your 20% investment is being managed.

Just as Air Europa celebrates its 15th anniversary in Skyteam, there is news it may switch to OW as IAG takes up ownership and starts integration.

https://www.preferente.com/noticias-de- ... 20882.html

mercure1 wrote:

Just as Air Europa celebrates its 15th anniversary in Skyteam, there is news it may switch to OW as IAG takes up ownership and starts integration.

https://www.preferente.com/noticias-de- ... 20882.html

My Spanish is poor but, if I'm reading it right, the article suggests that SkyTeam is substantially bigger than OneWorld: far more daily flights are destinations.

Is that true?

PM wrote:

mercure1 wrote:

Just as Air Europa celebrates its 15th anniversary in Skyteam, there is news it may switch to OW as IAG takes up ownership and starts integration.

https://www.preferente.com/noticias-de- ... 20882.html

My Spanish is poor but, if I'm reading it right, the article suggests that SkyTeam is substantially bigger than OneWorld: far more daily flights are destinations.

Is that true?

I have not yet verified the claim, however for the sake of easier reading, here is that excerpt.

https://www.preferente.com/noticias-de-transportes/noticias-de-aerolineas/air-europa-celebra-el-que-podria-ser-su-ultimo-aniversario-en-skyteam-320882.htmlLa segunda cuenta en la actualidad con una flota aproximada de 2.000 aviones, los cuales realizan una media de 8.500 vuelos diarios a 570 destinos internacionales.
SkyTeam, por su parte, dispone de más de 2.700 aeronaves, 15.000 vuelos diarios y un millar de destinos.
Ambas se encuentran muy por detrás de Star Alliance, líder indiscutible con 28 aerolíneas miembros, más de 4.000 aviones y unos 20.000 vuelos por día.

I have not yet verified the claim, however for the sake of easier reading, here is that excerpt.

....therefore, to be contested is:
- OneWorld fleet size: 2000 Aircraft, 8500 daily flights, to 570 International Destinations.
- SkyTeam fleet size: 2700 Aircraft, 15000 daily flights, to 1000 Destinations.
- StarAlliance fleet size: 4000 Aircraft, 20000 daily flights (over 28 Airline Members).

...and at first, I can see that we have a bit of a 'mixed analogies' that are potentially providing a false image if extrapolated. Case in point, the article offers "570" as "International Destinations" {served, and if so, how?} however what is the 'domestic' market that is being considered, as a counterpart to the "international destinations"? Backing to SkyTeam, I do wonder why the author did not offer an actual number. "A Thousand" ("un millar") is an oddly approximate number. When then comparing StarAlliance, the author offers over 28 Airline Members (which is the admirable achievement of StarAlliance), at the harm of offering the total number of any true number of destinations served. Once more, not yet contesting the facts (as this may indeed be valid, as OneWorld has a smaller number of alliance members), just their display, relevance and perhaps accepting them to base factual arguments, at this time. If anyone would like to, or be able to assist with the fact checks here, it would be greatly appreciated.

Did AF/KL put in a bid?.

The Spanish press reports that Air Europa is in talks with two US funds, Cerberus Capital Management and Ares Management for a US$400 million loan convertible into shares, as alternative to further investment by IAG. The airline believes that the EU will cap IAG's investment in UX at 49%,

IAG has finally agreed on terms to acquire Air Europa for EUR €400m, representing the 80% it did not already own

https://www.nasdaq.com/articles/iag-agr ... -mln-euros

IAG expects the purchase to be finalized in the next 18 months pending regulatory approvals.

It will be interesting to see what happens on Madrid-islands, which are the only routes where competition will be an issue.

Most of those routes are flown by Iberia, Air Europa and Ryanair. Now it will be down to 2 carriers only. Will Volotea enter the market? Or will we see something completely new like Wizz Air opening bases and starting domestic routes in Spain? Those markets are huge and incentivised by the 75% reduction to island residents.

IAG must feel fairly confident there has been a change in attitude among the antitrust authorities on this one.

Keeping the brand seems strange. You will now have Iberia, Iberia express, vueling, Aer Europa and Level in Spain.

I hope the merger is blocked. For competition, the value of a network is much more valuable than the sum of it's individual routes.

I hope for the competetion they have to give up plenty of slots in airports, such as LHR, ORY, BCN and of course MAD.

zkojq wrote:

I hope the merger is blocked. For competition, the value of a network is much more valuable than the sum of it's individual routes.

Completely agree. However the powers in IAG will get their way no doubt by their buddies in the EU €€€€€€

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nicode wrote:

I hope for the competetion they have to give up plenty of slots in airports, such as LHR, ORY, BCN and of course MAD.

MAD makes sense but why LHR? Air Europa doesn't even operate there. So IAG acquiring them will have no bearing on competion at LHR.

Air Europa flies double daily between Gatwick and Madrid. After an IAG takeover, the number of companies flying between London and Madrid will shrink from 4 to 3

Metropolitan area population are London - 14 million people, Madrid 6.7 million people. Unlike Germany or Italy, the UK and Spain are each very much economically dominated by a single city.

On a random Saturday in March from London to Madrid
Easyjet - 2 flights
Ryanair - 5 flights
Air Europa - 2 flights
IAG (excluding Air Europa) - 17 flights

Yes, Easyjet and Ryanair (and maybe even Jet2 or Wizz in the future) are able to compete... but IAG becomes very much the dominant airline on this city pair. For a route between 2 very large cities in the same continent, it is not good if one airline-holding-company has near monopoly control

If they aren’t forced to give anything up then it only shows how corrupt the EU is compared to their U.S counterparts. We’ll have to wait and see.

davidjohnson6 wrote:

On a random Saturday in March from London to Madrid
Easyjet - 2 flights
Ryanair - 5 flights
Air Europa - 2 flights
IAG (excluding Air Europa) - 17 flights

Yes, Easyjet and Ryanair (and maybe even Jet2 or Wizz in the future) are able to compete... but IAG becomes very much the dominant airline on this city pair. For a route between 2 very large cities in the same continent, it is not good if one airline-holding-company has near monopoly control

Obviously LHR slots would be a problem, but are there other constraints that would inhibit Easyjet and Ryanair from expanding LON-MAD services?

lesfalls wrote:

If they aren’t forced to give anything up then it only shows how corrupt the EU is compared to their U.S counterparts. We’ll have to wait and see.

One point to consider is that without IAG, it’s likely Air Europa would cease to exist and IB would gain this market share regardless. Allowing the acquisition with separate brands and (I presume) some amount of accommodation for other airlines in MAD, does create a viable hub to compete with AMS/CDG & MUC/FRA.

I would expect Level and Iberia Express to disappear if this goes through.

davidjohnson6 wrote:

Air Europa flies double daily between Gatwick and Madrid. After an IAG takeover, the number of companies flying between London and Madrid will shrink from 4 to 3

Metropolitan area population are London - 14 million people, Madrid 6.7 million people. Unlike Germany or Italy, the UK and Spain are each very much economically dominated by a single city.

On a random Saturday in March from London to Madrid
Easyjet - 2 flights
Ryanair - 5 flights
Air Europa - 2 flights
IAG (excluding Air Europa) - 17 flights

Yes, Easyjet and Ryanair (and maybe even Jet2 or Wizz in the future) are able to compete... but IAG becomes very much the dominant airline on this city pair. For a route between 2 very large cities in the same continent, it is not good if one airline-holding-company has near monopoly control

Any remedy must address loss of competition in markets actually affected by the merger, and the fix proposed must address the problem identified. You can't just go willy-nilly and demand changes because you don't like the way things are.

The problem here is that the addition of 2 flights a day on MAD-LGW isn't going to make IAG any more dominant than it already is. The effect of the merger on MAD-LON is 0. The only markets where there are significant competition concerns as a result of the merger are domestic Spain, and to some extent Latin America, although the latter hasn't been raised as an area of concern so far.

Funnily enough, IAG is actually helped by Brexit here. Because the competition oversight is now split between UK and EU, the UK's CMA will only look at UK-Spain traffic and, as already mentioned, the merger has basically no effect there. I'd be surprised if this goes very far with the CMA at all. And the EU, which is likely to be more combative, has no longer any jurisdiction to impose slot divesture at UK airports.

lesfalls wrote:

If they aren’t forced to give anything up then it only shows how corrupt the EU is compared to their U.S counterparts. We’ll have to wait and see.

How is the EU commission coming to the conclusion that the merger does not materially impact on competitiknshow it is corrupt? Have you got any evidence to prove the merger's impact on competition?

nicode wrote:

I hope for the competetion they have to give up plenty of slots in airports, such as LHR, ORY, BCN and of course MAD.

Why BCN? Looking at today's departures, I can find a grand total of 8 Air Europa flights. And 3 from ORY. Does Air Europa even fly to LHR? Hardly a dent in competition if they were to come under the IAG umbrella?

Seems like discussions here are more led by emotions than fact?