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International Airlines Group (IAG) has told shareholders its
subsidiary Iberia will not pursue the planned acquisition of Air Europa from

IAG, which also owns British Airways and Aer Lingus,
announced its intention to buy Air Europa in 2019 and at the time the sale
price agreed was €1 billion. The deal was renegotiated in January 2021, with
the price reduced to €500 million in the face of financial hardships in the
airline industry caused by the Covid-19 pandemic.

The group had hoped the acquisition would allow it to turn
Madrid into a global aviation hub to rival Amsterdam, Frankfurt, Heathrow and
Paris Charles de Gaulle, as well as cement the company’s position as a leader
in the South Atlantic market.

However, the European Commission announced in June this year
that it would investigate the deal over concerns it would reduce competition on
Spanish domestic and international routes.

Then in November the UK’s Competition and Markets Authority
opened its own investigation over whether the acquisition would impact
competition in the UK.

While no reason was given for the end of the agreement, IAG
said a further update would be made in the future “as appropriate”.


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