IAG-Air Europa: #1 on Europe-Latin America, overtakes Air France-KLM
On 4-Nov-2019 IAG announced that Iberia had agreed to buy Spanish rival Air Europa for EUR1 billion, with completion expected in 2H2020. It does not require IAG shareholder approval, but will require regulatory approval.
Air Europa's brand will initially be retained and it will be run as a standalone profit centre within Iberia. The use of the word 'initially' suggests that IAG may phase out the Air Europa brand at some point, perhaps to merge it fully with Iberia, but is also keeping its options open to merge it with another of its brands (such as LEVEL or Vueling).
Judged by share of all seats to/from/in Europe, the acquisition will not have a big impact on market structure. Based on OAG data for summer 2019, Air Europa will take IAG's share from 9.4% to 10.4%, but keep it in third place behind Lufthansa Group and Ryanair.
However, it will reinforce IAG's leadership at Madrid, take IAG ahead of Air France-KLM on Europe-Latin America seat share, and extend its lead by the number of Latin American destinations. Moreover, it will end Air France-KLM's hopes of a JV with Air Europa and mitigate the lack of progress on completing IAG's planned JV with LATAM Airlines.
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