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tobsw
Posts: 136
Joined: Mon Jul 11, 2011 2:29 pm

Re: IAG to buy Air Europa for €1 billion

Thu Dec 12, 2019 9:14 am

Being the 2nd carrier in MAD is not a marginal carrier. We are not comparing Spanish traffic, we are looking at MAD traffic (IB and UX operations outside MAD are indeed marginal).

Air Nostrum is not owned by IAG (or IB), but it operates as a franchise for IB. They don't sell tickets separately. IB sells tickets for them. The same way as routes to the USA, AA and IB are operating like a single carrier (JBA).

UX is a real threat for IB, that's why they want to acquire them (as an enterprise, who likes competition?) They've done their job while IB was arguing about the gender of angels. While IB was cutting routes and frequencies here and there, UX was adding routes and frequencies, new planes, new seats (their new LH business seat, way better than IB IMHV), etc. Today, UX is profitable, and clearly, other groups are interested in them. The take home message is that IB can't compete. Look at their routes to CDG, AMS, MUC and FRA. They send a shy CRJ to FRA,,, while Lufty sends a 321. Of their lousy 2 daily flights to AMS. They can't compete on a one to one basis with the big ones.

As I said, the ex-MAD domestic market is where the biggest problems are. Look at routes ex-MAD to Canary and Balearic Islands. IB has already a big market share, but together with UX, it's close to a monopoly (or market domination - which the EC doesn't like either).

MAD-BIO, MAD-OVD, MAD-LCG, MAD-VGO, there's a healthy competition now between IB and UX. There's no alternative NOW SCQ83. There might be in the next couple of years. But now, there isn't. Competition authorities look at how the market is now, not in x time ahead.

European routes are mostly fine, there will be enough competition. There are some odd routes, like VCE, DUS but I doubt there will be any real problems. UX doesn't fly to that many European cities anyway.

Intercontinental routes, as I said, there are some interesting ones:
-MIA: IB (+AA) + UX: monopoly
-PTY, MVD,: monopoly
-HAV, UIO, GYE, LIM, NYC (TLV?): market domination
 
himarhernandez
Posts: 78
Joined: Fri Mar 10, 2017 5:03 pm

Re: IAG to buy Air Europa for €1 billion

Fri Dec 13, 2019 2:43 pm

SCQ83 wrote:
SKAirbus wrote:
I hope that the EU stop this in its tracks. Lufthansa being allowed to buy up all its competition in Northern and Central Europe has led to very noncompetitive conditions with routes such as BRU-FRA, BRU-MUC, BRU-ZRH and BRU-VIE only being flown by LH Group airlines. I'm often quoted €400 + for a return in Economy for these - once I had to pay €800 to ZRH. If the same is allowed to happen in Spain, it is very bad for the consumer.


Air Europa + IAG will no lead to any of those monopolies that for some reason some posters here insist on. E.g. MAD-BRU is currently flown by Air Europa, Iberia, Brussels and Ryanair. So with the merge there will be still 3 carriers competing among them.

Domestically it is not an issue either because there is high-speed train to Madrid or competitors (Ryanair, Volotea, Air Nostrum - which is not part of IAG -) in domestic non-Madrid routes.

Most of the comments here show quite a bad understanding of the market in Spain. Air Europa is quite a “marginal” player very focused on Spain/EU connections to MAD to feed their LATAM network. On point-to-point traffic (intra-Spanish, Spain-EU) are a minor player.

For instance an hypothetical merge between IAG and Ryanair would be way trickier in terms of competition (since Ryanair is a bigger carrier than Air Europa in Spain).


You are correct that it would not create a monopoly BUT it will totally eliminate competition in many routes as mentioned by many before (especially the Canaries, Balearic and Northern Spain). Yes, some of those regions will have train in the near future but the islands will obviously not. Also, even if I live in a town connected by train but I am using Madrid to connect and fly, lets say the US, I would most likely not catch the train to Madrid but rather fly and connect at the airport.
 
SCQ83
Posts: 5677
Joined: Wed Oct 03, 2012 8:32 pm

Re: IAG to buy Air Europa for €1 billion

Fri Dec 13, 2019 3:01 pm

himarhernandez wrote:
You are correct that it would not create a monopoly BUT it will totally eliminate competition in many routes as mentioned by many before (especially the Canaries, Balearic and Northern Spain). Yes, some of those regions will have train in the near future but the islands will obviously not. Also, even if I live in a town connected by train but I am using Madrid to connect and fly, lets say the US, I would most likely not catch the train to Madrid but rather fly and connect at the airport.


That is simply not true. It will not eliminate competition in “many” routes; specially in busy routes. There is Ryanair to the islands, Air Nostrum (not part of IAG), Volotea and until recently Norwegian.

Norwegian recently cut their routes to the islands and Ryanair has downsized massively... probably because (low) fares were unsustainable. If fares go up again, they can expand.
 
SCQ83
Posts: 5677
Joined: Wed Oct 03, 2012 8:32 pm

Re: IAG to buy Air Europa for €1 billion

Fri Dec 13, 2019 3:10 pm

tobsw wrote:
Intercontinental routes, as I said, there are some interesting ones:
-MIA: IB (+AA) + UX: monopoly
-PTY, MVD,: monopoly
-HAV, UIO, GYE, LIM, NYC (TLV?): market domination


I already discussed in a previous point the Northern Spain situation for where there is no issue.

As for those TATL, that is pure non sense.

For instance Panama was started I think last year by Air Europa. So for years it was an Iberia monopoly.

Your mention to Montevideo is even more hilarious. That is a completely secondary market where 99.9% of people in Spain could not care less because they have no interest. During the crisis there were not even flights to Uruguay, and then both UX and IB started them (which is probably an overkiller).

I could only see some issue in some Madrid-islands. But Ryanair could expand here (after this year’s cut to Canarias) or Norwegian open those routes.
 
GalebG4
Posts: 241
Joined: Fri Oct 19, 2012 11:49 pm

Re: IAG to buy Air Europa for €1 billion

Fri Dec 13, 2019 3:25 pm

If Europeans wants another mega hub, like CDG, AMS, FRA and MUC they should approve this merger. Yes they will unfortunately need to do some changes and sacrifices, but in my opinion it is possible.
 
SCQ83
Posts: 5677
Joined: Wed Oct 03, 2012 8:32 pm

Re: IAG to buy Air Europa for €1 billion

Fri Dec 13, 2019 4:45 pm

tobsw wrote:
Being the 2nd carrier in MAD is not a marginal carrier. We are not comparing Spanish traffic, we are looking at MAD traffic (IB and UX operations outside MAD are indeed marginal)


Ryanair is not far off Air Europa.

Considering a large amount of traffic that UX carries is Europe-LATAM, Ryanair is certainly and by far the 2nd carrier for Madrid's local traffic.

1 Iberia 14,055,597
2 Air Europa 7,783,953
3 Ryanair 6,697,100
4 Iberia Express 4,987,319
5 Air Nostrum (Iberia Regional) 2,920,535
6 easyJet 1,495,941
7 Norwegian Air International 1,327,493
8 Vueling 1,223,888
9 Lufthansa 821,380
10 Air France 685,821
 
tobsw
Posts: 136
Joined: Mon Jul 11, 2011 2:29 pm

Re: IAG to buy Air Europa for €1 billion

Sat Dec 14, 2019 12:21 pm

I believe the data @SCQ83 is sharing is outdated.

Here we have to/from MAD pax data for the period Jan-Dec 2019 (available freely on the Aena website).

1. Iberia: 15,132,645
2. Air Europa: 9,095,545
3. Ryanair: 6,311,200
4. Iberia Express: 5,616,720
5. Air Nostrum (Iberia Regional): 3,276,226
6. Vueling: 1,241,008
7. Easyjet UK 932,468
8. Lufthansa: 787,424
9. Norwegian: 768,480
10. American Airlines: 743,611


Indeed SCQ83 there used to be a monopoly on many routes prior to the existence of Air Europa. However, the EC will look at the market conditions NOW (you don't seem to understand this). The EC will look at routes where the combined IB(IAG)+UX market is dominating or essentially a monopoly. Here's where remedies come into.

IAG and IB know that in one way or another the EC will approve the acquisition. The key is what remedis / concessions IAG + IB and UX have to deal with. If Globalia (Hidalgo family) realises they are not getting rid enough of the airline (let's say EC says OK to LH but no to SH), they will pretty much walk away and pocket in €40 million. They know the AF/KLM group is highly interested in UX, and there aren't many issues (in terms of competition authorities).

It's not going to be an acquisition on a silver plate. IB is trying very hard to sweetening the deal with "MAD will become a hub able to compete with AMS, CDG or FRA.... a link between Asia and South/Central America (every one knows this is pretty much pointless). IB doesn't know how to compete to begin with.
 
Kadish
Posts: 369
Joined: Thu Aug 31, 2017 11:36 am

Re: IAG to buy Air Europa for €1 billion

Sat Dec 14, 2019 3:04 pm

tobsw wrote:
Being the 2nd carrier in MAD is not a marginal carrier. We are not comparing Spanish traffic, we are looking at MAD traffic (IB and UX operations outside MAD are indeed marginal).

Air Nostrum is not owned by IAG (or IB), but it operates as a franchise for IB. They don't sell tickets separately. IB sells tickets for them. The same way as routes to the USA, AA and IB are operating like a single carrier (JBA).

UX is a real threat for IB, that's why they want to acquire them (as an enterprise, who likes competition?) They've done their job while IB was arguing about the gender of angels. While IB was cutting routes and frequencies here and there, UX was adding routes and frequencies, new planes, new seats (their new LH business seat, way better than IB IMHV), etc. Today, UX is profitable, and clearly, other groups are interested in them. The take home message is that IB can't compete. Look at their routes to CDG, AMS, MUC and FRA. They send a shy CRJ to FRA,,, while Lufty sends a 321. Of their lousy 2 daily flights to AMS. They can't compete on a one to one basis with the big ones.

As I said, the ex-MAD domestic market is where the biggest problems are. Look at routes ex-MAD to Canary and Balearic Islands. IB has already a big market share, but together with UX, it's close to a monopoly (or market domination - which the EC doesn't like either).

MAD-BIO, MAD-OVD, MAD-LCG, MAD-VGO, there's a healthy competition now between IB and UX. There's no alternative NOW SCQ83. There might be in the next couple of years. But now, there isn't. Competition authorities look at how the market is now, not in x time ahead.

European routes are mostly fine, there will be enough competition. There are some odd routes, like VCE, DUS but I doubt there will be any real problems. UX doesn't fly to that many European cities anyway.

Intercontinental routes, as I said, there are some interesting ones:
-MIA: IB (+AA) + UX: monopoly
-PTY, MVD,: monopoly
-HAV, UIO, GYE, LIM, NYC (TLV?): market domination


Maybe IB sends a shy CRJ to FRA, but they send 320/321 to places where Lufty ( as you say) sends nothing such as Berlin, Hamburg or Düsseldorf where IB is up to 3 daily.
 
tobsw
Posts: 136
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Re: IAG to buy Air Europa for €1 billion

Sat Dec 14, 2019 6:30 pm

Kadish wrote:
Maybe IB sends a shy CRJ to FRA, but they send 320/321 to places where Lufty ( as you say) sends nothing such as Berlin, Hamburg or Düsseldorf where IB is up to 3 daily.


You are comparing apples to bananas. It's like saying "IB sends nothing such as Barcelona, Valencia, Bilbao where LH is up to 6 daily (BCN) and 2/3 in the other destinations.".

What I´m trying to say is that IB has no premium product. When they try and compete against a premium airline (head to head), they tend to not succeed (the same with AMS and CDG). They need to do better , be more attractive. At the end of the day, you need to attract the premium customer if you want to survive. There´s no money in cheap fares.

IB´s strategy is of course, legitimate and respectable. However, now that the airline is working (there´s peace with the unions, slowly recovering from years of capacity cuts - 2013 was a massive drop), and if IB succeeds acquiring Air Europa, it´s time for them to re-focus on customer quality. I´m not saying offering free snacks, meals,.. in SH (I think that´s pointless) but providing value (great lounges, great on-board food and service, great cusomter service), in a way Finnair is doing great and quite premium-lite. Finnairs new lounges are absolutely gobsmacking, with a specific area for their top-frequent flyers (not even C class pax can access it!). The advantage of IB is "they got a beautifiul airport and terminal". Just squeeze every little potential out of it.

Anyway, if IB wants to succeed in being an important European hub (they are important, especially for Southamerican destinations - but it´s not that great, they are being shadowed by KML-CDG which serve the same routes (except MVD and CCS), they need to be able to compete successfully at a premium level. That´s where the "show me the f*cking money" is!
 
Kadish
Posts: 369
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Re: IAG to buy Air Europa for €1 billion

Sat Dec 14, 2019 6:40 pm

tobsw wrote:
Kadish wrote:
Maybe IB sends a shy CRJ to FRA, but they send 320/321 to places where Lufty ( as you say) sends nothing such as Berlin, Hamburg or Düsseldorf where IB is up to 3 daily.


You are comparing apples to bananas. It's like saying "IB sends nothing such as Barcelona, Valencia, Bilbao where LH is up to 6 daily (BCN) and 2/3 in the other destinations.".

It Is not.

What I´m trying to say is that IB has no premium product. When they try and compete against a premium airline (head to head), they tend to not succeed (the same with AMS and CDG). They need to do better , be more attractive. At the end of the day, you need to attract the premium customer if you want to survive. There´s no money in cheap fares.

IB´s strategy is of course, legitimate and respectable. However, now that the airline is working (there´s peace with the unions, slowly recovering from years of capacity cuts - 2013 was a massive drop), and if IB succeeds acquiring Air Europa, it´s time for them to re-focus on customer quality. I´m not saying offering free snacks, meals,.. in SH (I think that´s pointless) but providing value (great lounges, great on-board food and service, great cusomter service), in a way Finnair is doing great and quite premium-lite. Finnairs new lounges are absolutely gobsmacking, with a specific area for their top-frequent flyers (not even C class pax can access it!). The advantage of IB is "they got a beautifiul airport and terminal". Just squeeze every little potential out of it.

Couldnt agree more.

Anyway, if IB wants to succeed in being an important European hub (they are important, especially for Southamerican destinations - but it´s not that great, they are being shadowed by KML-CDG which serve the same routes (except MVD and CCS), they need to be able to compete successfully at a premium level. That´s where the "show me the f*cking money" is!
 
OGLOBAL
Posts: 200
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Re: IAG to buy Air Europa for €1 billion

Sat Dec 14, 2019 11:41 pm

i am based in MAD and to be honest overtime i fly with IB i've faced so many issues that i stopped flying with them and switched to UX . yes UX flies to less destination but i don't mind making an extra connection through CDG or AMS plus they are very generous with their miles and upgrades unlike IB . In 6 months i became gold with UX. issues with IB were either very delayed flight , luggage not arriving on time , being over charged twice which i only found after checking my credit card statement , on top of that if you have a problem you are obliged to call a paid customer service number ...
 
BealineV953
Posts: 152
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Re: IAG to buy Air Europa for €1 billion

Mon Jan 06, 2020 2:21 pm

zkojq wrote:
IAG’s Purchase of Air Europa is Very Bad For Passengers

BealineV953 wrote:
Elsewhere you suggest that IAG will reduce frequency and put up prices.

Economic theory says that if a company makes excess profits, competitors will enter the market.


And once a competitor enters the market, IAG will lower prices dramatically, dumping capacity to make sure their competition is short lived.


BealineV953 wrote:

Anti-competitive behaviour is prohibited by Articles 101 and 102 of the Treaty on the Functioning of the European Union (TFEU).

EU competition law prohibits two main types of anti-competitive activity, one of which is ‘Abuse of a dominant market position’ (under the Article 102 prohibitions). This prohibits businesses with significant market power unfairly exploiting their strong market positions.


So we can assume that Austrian will be prosecuted for dumping capacity to try and keep out Wizzair and Laudamotion from Vienna?
Unfortunately whilst consumer authorities are generally good at preventing mergers that substantially reduce competition, prosecuting companies for capacity dumping is very difficult and thus rare. And that's globally, not just in the EU.


Has someone suggested that Austrian are dumping capacity to try and keep out Wizzair and Laudamotion?
Legal action can be instigated by the Regulators or the affected companies. If Wizzair and Laudamotion believe they are the victims of illegal anti-competitive action they can refer the issue to the regulators.
Last edited by BealineV953 on Mon Jan 06, 2020 2:29 pm, edited 1 time in total.
Ever since childhood, when I lived within sight of London Airport, I have seldom seen a plane go by and not wished I was on it.”
With apologies to Paul Theroux - ‘The Great Railway Bazaar’
 
BealineV953
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Re: IAG to buy Air Europa for €1 billion

Mon Jan 06, 2020 2:26 pm

zkojq wrote:
IAG’s Purchase of Air Europa is Very Bad For Passengers


BealineV953 wrote:
Elsewhere you suggest that IAG will reduce frequency and put up prices.

Economic theory says that if a company makes excess profits, competitors will enter the market.


Do you have evidence for your claim that "once a competitor enters the market, IAG will lower prices dramatically, dumping capacity to make sure their competition is short lived"?
Are you thinking of a precedent?

In any case, if competition is short lived, economic theory says that if a company makes excess profits, competitors will enter the market. That is, the cycle will repeat.
Ever since childhood, when I lived within sight of London Airport, I have seldom seen a plane go by and not wished I was on it.”
With apologies to Paul Theroux - ‘The Great Railway Bazaar’
 
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zkojq
Posts: 4283
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Re: IAG to buy Air Europa for €1 billion

Sun Feb 02, 2020 10:55 am

BealineV953 wrote:
Do you have evidence for your claim that "once a competitor enters the market, IAG will lower prices dramatically, dumping capacity to make sure their competition is short lived"?

Economics 101.

BealineV953 wrote:
In any case, if competition is short lived, economic theory says that if a company makes excess profits, competitors will enter the market. That is, the cycle will repeat.

In a free market yes. As it happens though aviation has very high barriers to entry.
First to fly the 787-9
 
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Jayafe
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Re: IAG to buy Air Europa for €1 billion

Sun Feb 02, 2020 11:54 am

BealineV953 wrote:
Do you have evidence for your claim that "once a competitor enters the market, IAG will lower prices dramatically, dumping capacity to make sure their competition is short lived"?
Are you thinking of a precedent?


That’s actually already common practice by VY in the Spanish market, specially small airports.
Fighting Volotea, Norwegian and RyanAir dumping capacity till they’re gone, and then raising the prices (and even cutting capacity back) once they have the market for themselves.
 
BealineV953
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Re: IAG to buy Air Europa for €1 billion

Thu Feb 06, 2020 5:38 pm

zkojq wrote:
BealineV953 wrote:
Do you have evidence for your claim that "once a competitor enters the market, IAG will lower prices dramatically, dumping capacity to make sure their competition is short lived"?

Economics 101.

BealineV953 wrote:
In any case, if competition is short lived, economic theory says that if a company makes excess profits, competitors will enter the market. That is, the cycle will repeat.

In a free market yes. As it happens though aviation has very high barriers to entry.


The question is, if Air Europa is acquired by IAG, are there barriers to entry that would prevent other airlines from entering the markets that Air Europa currently serves.

The EU is pro-consumer. EU competition law seeks to maintain competition and to protect consumers from anti-competitive behaviour.

‘Jetty’, in posts 184, 186 and 231, describes how EU Regulators consider proposed acquisitions. The posts include links to helpful information on this.

In the EU rules on acquisition it says: “…the entry of new competitors may be regarded as a competitive constraint which is sufficient to prevent or thwart the potential anti-competitive effects of the concentration.”

‘Barriers to entry’ are primarily those things that a prospective market entrant does not have control over.

To enable competition, EU regulators have in previous cases made their approval of an airline acquisition, merger or joint venture conditional on the removal of barriers to entry.

In the airline business landing and take-off slots at slot restricted airports can be a barrier to entry.

EU approval of the BA acquisition of bmi was conditional on, amongst others things, BA releasing suitable slots at Heathrow to enable other airlines to offer UK domestic services.

See:

https://ec.europa.eu/commission/pressco ... /IP_12_338

On that webpage there are links to more detailed information.

In some markets access to gates at airports can be a barrier to entry. However, in Europe access to airport gates is rarely an issue. In Europe gates are usually managed by the airport and are typically ‘common use’, that is, used by any carrier. Where an airline has a landing slot, it is in the airport’s interest to grant the airline access to a gate at the appropriate time.

There are no barriers that prevent consumers moving from one airline to another. Consumers are not locked into using any one carrier.

If the proposed acquisition of Air Europa is approved and goes ahead then EU competition law applies.

Articles 101 and 102 of the Treaty on the Functioning of the European Union (TFEU) prohibit anti-competitive behaviour. Article 102 prohibits ‘Abuse of a dominant market position’. This prevents a business with significant market power from unfairly exploiting its strong market position. As a general rule, if a business has a 50% market share there is a presumption that it is dominant. However, dominance has been found to exist where market share is as low as 40%.

A ‘dominant’ airline will, for example, typically be limited to offering Travel Agents incentive schemes based on revenue and not based on market share. So, other potential ‘barriers’ are effectively lowered.

Established airlines, if they enter a market, have to decide whether they are likely to make a profit. If an airline believes it has a compelling value for money offer then it can be confident of being able to compete with a dominant competitor.

Ryanair, easyJet and Wizz have shown that they are willing to try new markets and that they are perfectly capable of competing profitably with other carriers. Where they have not been happy with the results, they have simply moved resources (aircraft, crews etc.) from one market to another. This flexibility means that for those carriers there is little risk in entering, or re-entering, Air Europa markets.

The bottom line is that there will be few if any barriers to other airlines that might want to enter markets currently served by Air Europa.

IAG will have to decide whether the proposed acquisition is still attractive after any concessions they are required to make. IAG manages expenditure very carefully. IAG has confirmed that it will pay a €40-million break fee to Globalia if the transaction does not proceed. This suggests to me that IAG has taken advice and is confident of approval with acceptable conditions.

We will see.
Ever since childhood, when I lived within sight of London Airport, I have seldom seen a plane go by and not wished I was on it.”
With apologies to Paul Theroux - ‘The Great Railway Bazaar’
 
vinaixa
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Re: IAG to buy Air Europa for €1 billion

Fri Mar 06, 2020 8:20 pm

Latest developments: as a Fix-It-First solution, IAG will give slots to regional airline Volotea in order to convince the EC that routes will remain competitive and the purchase will not damage consumers.

This new development brings the purchase one step closer to getting approval, the way I see it.

Source (in Spanish)

https://www.expansion.com/empresas/tran ... b46df.html
 
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lesfalls
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Re: IAG to buy Air Europa for €1 billion

Fri Mar 06, 2020 11:43 pm

vinaixa wrote:
Latest developments: as a Fix-It-First solution, IAG will give slots to regional airline Volotea in order to convince the EC that routes will remain competitive and the purchase will not damage consumers.

This new development brings the purchase one step closer to getting approval, the way I see it.

Source (in Spanish)

https://www.expansion.com/empresas/tran ... b46df.html


Interesting part is that V7 will be opening bases in Madrid, Galicia and the Canaries according to the article. Quite a scoop as they make it into the big games considering this and their acquisition of rights from the French Air Transportation ministry to operate flights between Algeria and France.
Lufthansa: Einfach ein bisschen besser.
 
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aemoreira1981
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Re: IAG to buy Air Europa for €1 billion

Sat Mar 07, 2020 2:53 am

If this deal is completed without major divestitures, especially on the long-haul front, where on MAD to LatAm traffic, especially outside of Mexico and countries with Avianca or LATAM long-haul, IAG would have a virtual monopoly. Short- and medium-haul likely becomes an effectively duopoly between IAG and Ryanair. Volotea doesn't have the scale to provide an effective third party.
 
onwFan
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Re: IAG to buy Air Europa for €1 billion

Sat Mar 07, 2020 3:29 am

aemoreira1981 wrote:
If this deal is completed without major divestitures, especially on the long-haul front, where on MAD to LatAm traffic, especially outside of Mexico and countries with Avianca or LATAM long-haul, IAG would have a virtual monopoly. Short- and medium-haul likely becomes an effectively duopoly between IAG and Ryanair. Volotea doesn't have the scale to provide an effective third party.

Which is exactly the same for many of LH routes out of FRA/MUC, KL routes out of AMS and AF routes out of CDG. In most of these cases, I don’t even see any significant competitor like LATAM or Avianca in MAD. Even DE, until now has conveniently chosen niche markets, with LH support. Any significant competition, if it exists, is only on the short-haul.

I think going forward, two-airline hub systems in Europe are not exactly going to be practical. In retrospect, Air Europa employees can probably heave a sigh of relief that there is a hope to be part of one of the major 3, given the uncertain future of the aviation industry now.
 
Detroit313
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Re: IAG to buy Air Europa for €1 billion

Sat Mar 07, 2020 4:15 am

aemoreira1981 wrote:
If this deal is completed without major divestitures, especially on the long-haul front, where on MAD to LatAm traffic, especially outside of Mexico and countries with Avianca or LATAM long-haul, IAG would have a virtual monopoly. Short- and medium-haul likely becomes an effectively duopoly between IAG and Ryanair. Volotea doesn't have the scale to provide an effective third party.


Isn't that the case in Paris, Amsterdam, Frankfurt and Munich?
 
vinaixa
Posts: 27
Joined: Fri Jan 01, 2016 2:43 pm

Re: IAG to buy Air Europa for €1 billion

Sat Mar 07, 2020 3:51 pm

aemoreira1981 wrote:
Volotea doesn't have the scale to provide an effective third party.


I don’t think the move is intended to make Volotea a strong competitor but instead ensure that important domestic routes that Ryanair does not operate (Hence IAG monopoly) are opened up to Volotea.

Flights from Madrid to BCN, VLC, BIO, AGP, SVQ (among others) are currently served only by IB AND UX (add Vueling to MAD-BCN). If IAG purchases UX, then it would have a monopoly on most routes between MAD and other points in the Iberian Peninsula. I can see how bringing Volotea in would help.
 
SCQ83
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Re: IAG to buy Air Europa for €1 billion

Sat Mar 07, 2020 4:01 pm

There is no point for those routes, so IAG is smart.

- Maybe Volotea will even go bankrupt at some stage (Coronavirus)
- Those routes cannot work without connections (save for the islands)
- The islands are very competitive and Ryanair can expand again any time. V7 has nothing to against IAG + Ryanair.
 
alfa164
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Re: IAG to buy Air Europa for €1 billion

Sat Mar 07, 2020 4:17 pm

SCQ83 wrote:
Your mention to Montevideo is even more hilarious. That is a completely secondary market where 99.9% of people in Spain could not care less because they have no interest.


You do realize there are people in other parts of the world - besides Spain - who want to travel, don't you? The people of Uruguay may not have such a cavalier attitude towards their options as you do...''

:roll:


aemoreira1981 wrote:
If this deal is completed without major divestitures, especially on the long-haul front, where on MAD to LatAm traffic, especially outside of Mexico and countries with Avianca or LATAM long-haul, IAG would have a virtual monopoly. Short- and medium-haul likely becomes an effectively duopoly between IAG and Ryanair. Volotea doesn't have the scale to provide an effective third party.


This. :checkmark:
I'm going to have a smokin' hot body again!
I have decided to be cremated....
 
Breathe
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Re: IAG to buy Air Europa for €1 billion

Sat Apr 04, 2020 5:21 pm

Given the current crisis and airlines scrambling to save themselves, what chance that this deal still goes ahead in its current form?
 
IWMBH
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Re: IAG to buy Air Europa for €1 billion

Sat Apr 04, 2020 5:30 pm

Breathe wrote:
Given the current crisis and airlines scrambling to save themselves, what chance that this deal still goes ahead in its current form?


I don’t think the deal goes ahead, at least not in its current form. UX isn’t worth at much after corona as it was before (no airline is). So if the deal goes ahead BA probably won’t be paying a billion dollars.

But, chances are that BA can’t afford the purchase right now. We’ve have to wait and see how long this crisis continues.
 
usflyer msp
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Re: IAG to buy Air Europa for €1 billion

Sat Apr 04, 2020 5:38 pm

I think there is 0% chance this acquisition in its current form. Does anyone know if agreement between IAG and Globalia included a force majure clause?
 
ShamrockBoi330
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Re: IAG to buy Air Europa for €1 billion

Sat Apr 04, 2020 5:56 pm

IWMBH wrote:
Breathe wrote:
Given the current crisis and airlines scrambling to save themselves, what chance that this deal still goes ahead in its current form?


I don’t think the deal goes ahead, at least not in its current form. UX isn’t worth at much after corona as it was before (no airline is). So if the deal goes ahead BA probably won’t be paying a billion dollars.

But, chances are that BA can’t afford the purchase right now. We’ve have to wait and see how long this crisis continues.


BA aren't, and were never buying it anyway.
 
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lightsaber
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Re: IAG to buy Air Europa for €1 billion

Sat Apr 04, 2020 6:37 pm

IWMBH wrote:
Breathe wrote:
Given the current crisis and airlines scrambling to save themselves, what chance that this deal still goes ahead in its current form?


I don’t think the deal goes ahead, at least not in its current form. UX isn’t worth at much after corona as it was before (no airline is). So if the deal goes ahead BA probably won’t be paying a billion dollars.

But, chances are that BA can’t afford the purchase right now. We’ve have to wait and see how long this crisis continues.

No company is worth what it was. We can expect the mergers and acquisitions pace to stop until terms are more favorable for buyers.

BA should focus on preserving cash. What is the penalty for them to opt out?

Thanks,
Neil
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oldJoe
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Re: IAG to buy Air Europa for €1 billion

Sat Apr 04, 2020 7:34 pm

lightsaber wrote:
IWMBH wrote:
Breathe wrote:
Given the current crisis and airlines scrambling to save themselves, what chance that this deal still goes ahead in its current form?


I don’t think the deal goes ahead, at least not in its current form. UX isn’t worth at much after corona as it was before (no airline is). So if the deal goes ahead BA probably won’t be paying a billion dollars.

But, chances are that BA can’t afford the purchase right now. We’ve have to wait and see how long this crisis continues.

No company is worth what it was. We can expect the mergers and acquisitions pace to stop until terms are more favorable for buyers.

BA should focus on preserving cash. What is the penalty for them to opt out?

Thanks,
Neil

You`re right ! In a few months they could buy them maybe for 1€ ( without billion )
 
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lesfalls
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Air Europa might stay independent.

Sun Jun 14, 2020 9:56 pm

https://www.turama.es/iberia-a-punto-de ... air-europa

Seems that the airline might stay independent as IAG is looking to save money with the current ongoing crisis. At the same time Air Europa might just accept the previous terms from the deal made with IB.

Your thoughts?
Lufthansa: Einfach ein bisschen besser.
 
IWMBH
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Re: Air Europa might stay independent.

Sun Jun 14, 2020 11:16 pm

I think it’s the right thing to do for IAG. Better save than sorry. Who knows how big the backlash of corona is going to be? A billion dollars can make a big difference.
 
davidjohnson6
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Re: Air Europa might stay independent.

Sun Jun 14, 2020 11:50 pm

Having long term monopoly pricing power in Spain is also kind of appealing to IAG... :-)
 
usflyer msp
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Re: Air Europa might stay independent.

Mon Jun 15, 2020 12:10 am

IWMBH wrote:
I think it’s the right thing to do for IAG. Better save than sorry. Who knows how big the backlash of corona is going to be? A billion dollars can make a big difference.


The is no way IAG is going to pay 1.1 Billion dollars for Air Europa. If IAG does choose to complete the transaction, it will have to be renegotiated to somewhere between 250 and 350 million dollars.

Plus, I have read that Globalia desperately needs the cash from the this transaction so IAG probably has the upper hand.
 
jfk777
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Re: Air Europa might stay independent.

Mon Jun 15, 2020 12:20 am

Given what is going on at British Airways how can IAG justify paying a Billion Euros for Air Europa. It's one thing to buyout jobs of people a few years from retirement, BA is cutting the top FA job pay in half. Willie Walsh doesn't still have to prove he is "tough as nails", we learned that long ago.
 
IWMBH
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Re: Air Europa might stay independent.

Mon Jun 15, 2020 12:22 am

usflyer msp wrote:
IWMBH wrote:
I think it’s the right thing to do for IAG. Better save than sorry. Who knows how big the backlash of corona is going to be? A billion dollars can make a big difference.


The is no way IAG is going to pay 1.1 Billion dollars for Air Europa. If IAG does choose to complete the transaction, it will have to be renegotiated to somewhere between 250 and 350 million dollars.

Plus, I have read that Globalia desperately needs the cash from the this transaction so IAG probably has the upper hand.


If they’re really desperate they can ask the Spanish government for aid. Iberia got a loan so why wouldn’t Air Europe be able to make a deal?
 
usflyer msp
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Re: Air Europa might stay independent.

Mon Jun 15, 2020 12:48 am

IWMBH wrote:
usflyer msp wrote:
IWMBH wrote:
I think it’s the right thing to do for IAG. Better save than sorry. Who knows how big the backlash of corona is going to be? A billion dollars can make a big difference.


The is no way IAG is going to pay 1.1 Billion dollars for Air Europa. If IAG does choose to complete the transaction, it will have to be renegotiated to somewhere between 250 and 350 million dollars.

Plus, I have read that Globalia desperately needs the cash from the this transaction so IAG probably has the upper hand.


If they’re really desperate they can ask the Spanish government for aid. Iberia got a loan so why wouldn’t Air Europe be able to make a deal?


Globalia needs the cash for its other business units not just Air Europa. This is a terrible time to own a travel agency business since no one is travelling.
 
skipness1E
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Re: Air Europa might stay independent.

Mon Jun 15, 2020 1:00 am

jfk777 wrote:
Given what is going on at British Airways how can IAG justify paying a Billion Euros for Air Europa. It's one thing to buyout jobs of people a few years from retirement, BA is cutting the top FA job pay in half. Willie Walsh doesn't still have to prove he is "tough as nails", we learned that long ago.

Well IAG battered Iberia into shape with the threat of growing Iberia Express and letting mainline die. All legal and customers would not be impacted as the brand is the same. That allowed a proper generational shift in cost cutting away from ex State owned legacy ways of working. IAG are using COVID as the reason to batter BA down the same way. It’s all about creating future shareholder value.
 
x1234
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Re: Air Europa might stay independent.

Mon Jun 15, 2020 1:11 am

Air Europa is a low cost way to fly LatAm to Europe. I hope it stays independent. Air Europa for some reason doesn't fly to Mexico (#2 largest LatAm economy). They should fly to MEX & CUN.
 
jfk777
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Re: Air Europa might stay independent.

Mon Jun 15, 2020 1:26 am

skipness1E wrote:
jfk777 wrote:
Given what is going on at British Airways how can IAG justify paying a Billion Euros for Air Europa. It's one thing to buyout jobs of people a few years from retirement, BA is cutting the top FA job pay in half. Willie Walsh doesn't still have to prove he is "tough as nails", we learned that long ago.

Well IAG battered Iberia into shape with the threat of growing Iberia Express and letting mainline die. All legal and customers would not be impacted as the brand is the same. That allowed a proper generational shift in cost cutting away from ex State owned legacy ways of working. IAG are using COVID as the reason to batter BA down the same way. It’s all about creating future shareholder value.


BA doesn't need any more cuts it produces 80% of IAG's profits, all those Americans flying Club Word. Willie Walsh believes "don't let a crisis go to waste". BA needs the British Government to open up the UK so they can resume flying to America.
 
MIflyer12
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Re: Air Europa might stay independent.

Mon Jun 15, 2020 1:40 am

lesfalls wrote:
https://www.turama.es/iberia-a-punto-de-cancelar-la-compra-de-air-europa


This really doesn't seem to be a recognized news source. The referenced piece is nothing but speculation.
 
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aemoreira1981
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Re: Air Europa might stay independent.

Mon Jun 15, 2020 4:33 am

If the deal doesn't complete...would UX still be for sale? Could they survive without latching onto someone else, like AF/KL?
 
B777LRF
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Re: Air Europa might stay independent. Aw

Mon Jun 15, 2020 6:37 am

skipness1E wrote:
They’re been consistently driving down costs, building up profits and adding shareholder value in recent years.


The former and the latter of your arguments is the exact reason for BA's descent into the realm of ever lower quality. Unless you're one of the institutions who hold the shares, or is one of the executives of IAG, who gives a flying so-and-so about shareholder value? And how have they driven down cost? Mainly by continually shafting their employees. Now if you think it's ok for the people actually doing the work to find themselves in ever worsening conditions, in order to make a few rich people even richer, then we'll have to disagree.

"Shareholder value" is the single worst expression ever to emanate from the cesspit that is Wall Street.

Besides, where is all that profit they amassed when they find themselves in need of cash?
Signature. You just read one.
 
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seahawk
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Re: Air Europa might stay independent.

Mon Jun 15, 2020 6:42 am

Air Europa´s owners should try to get the deal, they will never get as much money for the airline. Without joining IAG, the airline will probably not survive the next 3 years.
 
factsonly
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Re: Air Europa might stay independent. Aw

Mon Jun 15, 2020 6:48 am

skipness1E wrote:

They’re been consistently driving down costs, building up profits and adding shareholder value in recent years. Saying stuff like “IAG is a disaster of a group” just shows you have the wrong idea about what IAG is actually in business for.

and

Well IAG battered Iberia into shape with the threat of growing Iberia Express and letting mainline die. That allowed a proper generational shift in cost cutting away from ex State owned legacy ways of working. IAG are using COVID as the reason to batter BA down the same way. It’s all about creating future shareholder value.


Dear Skipness1E,

For a commercial business to focus on shareholder value only is very very old school.

In today's Business Schools the young are taught to look a little broader at our world. Words like 'Planet and People', as well as Profit regularly appear in their classes.

What IAG did to Iberia and is currently doing to BA is very old school and in today's environment could very well back fire on them.

Just a thought :white:
 
TUGMASTER
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Re: Air Europa might stay independent.

Mon Jun 15, 2020 7:38 am

Slightly off topic here.... So IAG will own Iberia , Iberia Express, Vueling , Air Europa, Level, and codeshare with Air Nostrom...?
Who’s left in Spain without IAG influence...?
 
max999
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Re: Air Europa might stay independent.

Mon Jun 15, 2020 7:46 am

davidjohnson6 wrote:
Having long term monopoly pricing power in Spain is also kind of appealing to IAG... :-)


TUGMASTER wrote:
Slightly off topic here.... So IAG will own Iberia , Iberia Express, Vueling , Air Europa, Level, and codeshare with Air Nostrom...?
Who’s left in Spain without IAG influence...?


Giving IAG monopoly power in Spain is wrong. The reasons for rejecting this deal have not changed regardless of the pandemic. The regulators should not allow this to happen.
Last edited by max999 on Mon Jun 15, 2020 7:56 am, edited 1 time in total.
All the things I really like to do are either immoral, illegal, or fattening.
 
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vhtje
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Re: Air Europa might stay independent.

Mon Jun 15, 2020 8:04 am

aemoreira1981 wrote:
If the deal doesn't complete...would UX still be for sale? Could they survive without latching onto someone else, like AF/KL?


If IAG, with their strong financials, are having second thoughts about the UX deal at the moment, you think AF-KLM, in their perilous financials state, are a good candidate to swoop in?

What are you smoking???
I only turn left when boarding aircraft. Well, mostly. All right, sometimes. OH OKAY - rarely.
 
Arion640
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Re: Air Europa might stay independent.

Mon Jun 15, 2020 8:35 am

jfk777 wrote:
skipness1E wrote:
jfk777 wrote:
Given what is going on at British Airways how can IAG justify paying a Billion Euros for Air Europa. It's one thing to buyout jobs of people a few years from retirement, BA is cutting the top FA job pay in half. Willie Walsh doesn't still have to prove he is "tough as nails", we learned that long ago.

Well IAG battered Iberia into shape with the threat of growing Iberia Express and letting mainline die. All legal and customers would not be impacted as the brand is the same. That allowed a proper generational shift in cost cutting away from ex State owned legacy ways of working. IAG are using COVID as the reason to batter BA down the same way. It’s all about creating future shareholder value.


BA doesn't need any more cuts it produces 80% of IAG's profits, all those Americans flying Club Word. Willie Walsh believes "don't let a crisis go to waste". BA needs the British Government to open up the UK so they can resume flying to America.


It’s actually the US government who’s put a ban on UK (European) citizens arriving. US Citizens can come to the UK as long as they self-isolate 14 days after arrival.
 
upperdeckfan
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Re: Air Europa might stay independent.

Mon Jun 15, 2020 9:52 am

max999 wrote:
davidjohnson6 wrote:
Having long term monopoly pricing power in Spain is also kind of appealing to IAG... :-)


TUGMASTER wrote:
Slightly off topic here.... So IAG will own Iberia , Iberia Express, Vueling , Air Europa, Level, and codeshare with Air Nostrom...?
Who’s left in Spain without IAG influence...?


Giving IAG monopoly power in Spain is wrong. The reasons for rejecting this deal have not changed regardless of the pandemic. The regulators should not allow this to happen.


The issue is that the "regulator" is the EU and they look at Spain as a piece of a common/open an larger EU market. Legally, every EU based carrier could open bases and operate from/to/within Spain unrestricted.
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