Shares in Aer Lingus owner IAG fall on scrapped Air Europa takeover

Competition regulators were concerned the deal would reduce competition in the Spanish domestic market and on international routes to the country

Air Europa provides connections to Latin America as well as serving destinations in Europe.

Shares in Aer Lingus owner IAG fell more than 5% on the back of the airline group confirming it has scrapped plans to buy Spanish airline Air Europa.

It is understood that the remedies IAG was prepared to offer in order to gain regulatory approval were not going to be enough to get the deal across the line.

IAG’s chief financial officer Stephen Gunning confirmed that the group is in advanced termination talks with Air Europa owner, Spanish tourism group Globalia.

IAG — which also owns British Airways and Spanish carriers Iberia and Vueling — agreed to pay €500m to buy Air Europa in January after the pandemic cut the original price in half and IAG struck a deal to defer payments for six years.

Air Europa provides connections to Latin America as well as serving destinations in Europe.

IAG had said the deal would boost the competitiveness of its Madrid hub and benefit consumers.

Competition regulators, however, were concerned the deal would reduce competition in the Spanish domestic market and on international routes to the country.

The remedies offered by IAG — to give up 13 short and medium-haul routes and two long-haul routes at Madrid and Barcelona airports — were not enough to assuage the concerns and a veto was understood to be likely.

-additional reporting Reuters