Several weeks ago it was rumored that IAG had renegotiated its purchase of Air Europa, and that’s now official. IAG is getting 50% off plus 0% APR for 72 months, which isn’t half bad.
Continue reading: IAG Slashes Air Europa Purchase Price In Half, Will Pay In Six Years
Share your questions, experiences, and thoughts below.
How these European carriers are able to get away with buying out their direct competition is beyond me. First BA gobbling up BMI and now Air Europa.
There has been plenty of consolidation in the U.S. airline industry of course. But it's not like those airlines had bases in the same airports. In fact, US Airways was forbidden from getting any larger at DCA after their merger with AA.
In my opinion Air Europa would probably have gone bust quite soon. IAG is bleeding money due to lock downs and travel restrictions that won’t end for at least 4 months. The last thing it should be doing is committing to buy another loss making business.
Looks like IAG would be on the hook for €40 million if they backed out of the deal. So they're really only paying €460 million and not until 2026.
Wouldn't Air Europa probably have gone bust during this pandemic and IAG would have lost a competitor without paying anything?
@niko_jas The brand has value and the airline could be recapitalized down the road and survived. This way they gain control now and any new competitors will need to build out there customer base.
@Daniel There are really only 3 big airlines in the USA now - they were all allowed to merge, as well as getting vast amounts of state subsidy (either directly or through the bizarre Chapter 11 process that we don't have here).
Looking at European airlines on a country-by -country basis is like looking at airlines in the US on a state-by-state basis. We have more people across our continent, yet we have far more airlines than the US does across a smaller population, so saying competition in the UK, or Spain, or Italy, or Germany is reduced ignores the wider context. As well as 3 huge "legacy" carriers (IAG, AF/KLM, and LH and its subsidiaries) we also have Ryanair, EasyJet and WizzAir. Air travel in Europe is incredibly cheap given all that, so I don't think one can easily compare the US and Europe so directly.
Thoughts?
Nannette - probably not.
Other than BA and a Iberia none of the other IAG airlines - Aer Lingus, Vuelling and Level - are members of One World and they’ve been owned by IAG for far longer.
Color me surprised... I wasn't expecting this to happen, especially after UX got a 475M € aid package from the Spanish government ( https://www.reuters.com/article/health-coronavirus-spain-aireuropa/update-2-spain-approves-475-mln-euro-aid-package-for-air-europa-idINL8N2HP4NY)
@Nannette - I think the plan is for it to be merged into Iberia/Iberia Express, so effectively it will end up as part of oneworld.
Bottom line I think it is a good deal for both IAG and UX. If travel recovers by say 2024/25, IAG will make a good investment, gaining a dominant position in SW Europe and Europe to LatAm - for relatively little money and with virtually no conditions imposed. In case travel will not recover, they can let UX go bankrupt before 2026 and will presumably have to pay nothing.
With the LATAM JV off, this was a must for them - Spain was going to save UX if IAG didn’t buy them. They had to act before AF/KL materialized their JV with UX and LATAM potentially partnered with them. There is no place for two hub carriers in MAD anymore...
"IAG argues that this acquisition will increase the importance of the Madrid hub, making it a true rival to Amsterdam, Frankfurt, and Paris"
That's a laugh. MAD airport does not come to mind when I think of pleasant experiences. Maybe there's an opportunity here to address that, but I highly doubt it.
Does Air Europa have a partnership with LOT? A couple of years ago I flew a LOT flight from BUD to ORD but the plane operating the route was actually Air Europa.
If it does result in Madrid becoming more of a hub, that would definitely be a good thing. With Brexit / no more single customs union, Delta/AF/KLM having a monopoly on Amsterdam and Paris, and Lufthansa/Swiss having a monopoly on Frankfurt and Zurich, it would be good to have IAG competing in mainland Europe. But I'm not holding my breath.
@ Charles
I have actually never traversed MAD and have read reports that are negative. I know my way around FRA for decades, nobody really likes FRA or considers it a pleasant experience.
I am not disabled but the FRA refusal to allow use of an elevator, escalator or arrange a ride when the gate is 1.3 km away is stunning. Please understand, gates in FRA term Z are built to require using steps for one floor when boarding. Gate agents prefer to allow steps only unless there is a documented disability. While I am not permitted to state this in Germany, their behavior is reminiscent of German SS behavior during WW 2 towards disabled.
@Donato I have had excellent experiences transferring at MAD and using the lounges at this airport. I have already appreciated the ability to use AA miles to get to Europe without having to deal with LHR and the extra fees that are charged on the BA flights. I see this as presenting more options for this.
@guflyer
I appreciate the information.
I have avoided using MAD as a transfer point on trips to the ME, not served by any of the ME3 nonstop. I select stopovers as perhaps healthier than a nonstop.
Is a MAD transfer as simple as walk to lounge, walk to flight? This assumes origin and destination both not in EU? I have heard of long lines out of control, no help if you are late and no priority based on class of travel.