International Airline Group's (IAG) purchase of Air Europa will likely face further setbacks as Brussels launches a fresh anti-competition probe.

As reported by The Financial Times, IAG's second attempt to form a deal with Air Europa parent group Globalia could be blocked altogether, according to industry insiders.

Further setbacks

Despite pressure from the Spanish government to speed up a deal between IAG and Globalia in January, the sale of Air Europa is again facing legislative hurdles, with regulators reportedly gearing up for a probe into the merger's impact on Spain's aviation industry. Speaking to the newspaper, an unnamed source noted,

“This is the second time this merger has been attempted, and it doesn’t look good. We didn’t like the first one. It’s going to be worse this time around.”

Photo: Luciano de la Rosa I Shutterstock.

IAG initially attempted to acquire Air Europa in 2019, putting up a €1 billion ($1.1 billion) bid that was eventually voided in 2019 amid the COVID-19 pandemic. IAG launched its second attempt to acquire its regional rival in late December 2022 following a meeting between Iberia's president Javier Sánchez-Prieto and Air Europa chief executive Nuño de la Rosa to ease fears about the purchase by a part-British company.

Blocked deal

Critics of the deal have frequently cited the potential negative impacts on the aviation market within Spain, with concerns raised about increased airfare on some services. Alongside Iberia, Spain's third largest airline by passenger traffic, IAG owns low-cost carrier Vueling, Spain's second-largest airline behind Irish competitor Ryanair. A merger with Air Europa would bolster IAG's share within the Spanish aviation market from 25% to over 33%, according to data compiled by Statista.

Photo: Airbus

The upcoming probe will reportedly examine the impact of IAG's controlling stake in Spain's aviation market on a route-by-route basis. Though the European Commission (EC) has historically blocked acquisitions that would severely limit competition, IAG still has a chance to secure approval if sufficient evidence can be provided that other airlines can access the market.

Upcoming strike action

While IAG prepares to face off against Brussels, Air Europa is gearing up for a recent four-day-long pilots strike called by Spain's Air Line Pilots Association (SEPLA). The walkout, scheduled to coincide with the national bank holiday on Monday 1, will see over 620 Air Europa pilots walk out in a row over low wages and apathy from the carrier in resolving the dispute.

Photo: Air Europa

In a statement provided to local media, a spokesperson for the union explained,

“It’s disheartening that Air Europa’s managers continue to ignore the pilots’ call for a rise in wages, which have remained stagnant for the past few years and have resulted in a loss of purchasing power, despite the fact that the airline has increased its flight prices by 54% in the last year.”

A significant portion of the airline's flights are expected to face disruption between May 1 and 5, with a break on May 3. Air Europa has not responded to a request for comment at the time of publication.

What are your thoughts on a potential IAG and Air Europa merger? Let us know in the comments.

Sources: The Financial Times, Statista, Canarian Weekly