Business
Sections
Highlight
Sections
Highlight
Edurne Martínez / Clara Alba
Madrd
Friday, 2 August 2024, 18:01
Opciones para compartir
There has been a second failed attempt by the multinational International Airlines Group (IAG) to take over Air Europa. The parent company of Iberia, British Airways, Vueling and Aer Lingus has given up the idea in the face of the European Commission's demands that, among other things, would force the group to make greater concessions on routes and slots to other competing airlines to avoid the risk of concentration in the market.
"It is the best decision to protect the interests of the shareholders," said Luis Gallego, the group's chief executive, on Wednesday. "The requirements of the Directorate General of Competition to give the green light to the operation are so high that it no longer makes business sense for Iberia. Therefore, we have decided not to go ahead," said sources yesterday. Iberia will have to pay 50 million euros in compensation to Globalia as the majority owner of Air Europa with 80% of the capital, as agreed in the purchase agreement.
Rarely before has Spain experienced a corporate takeover soap opera that has been so complex and that has lasted such a long time, pushing a company to the absolute limit. The first attempt at a merger-acquisition was in 2019 that was then frustrated in 2021 due to objections from Brussels concerning some 70 routes on which both airlines offered direct services and, in some cases, were the only operators.
Then, in August 2022, IAG acquired a 20% stake in Air Europa, which it will now keep. A year later, in December 2023, IAG made known its intention to take the remaining 80% of share ownership. During this long negotiation process the company led by Gallego had even offered to cease running up to 52% of the flights currently operated by Air Europa "so that none of the routes where the [European] Commission had identified competition problems would be left without a third operator."
This proposal came after another objections report from Brussels on 26 April, which already expressed reluctance to a merger that, according to its initial conditions, would imply controlling, for example, close to 65% of air traffic between Spain and America. Despite this, IAG had regained some hope in securing the go-ahead after its new offer of divestitures. Optimism remained high following the Commission's approval of another major merger in the airline industry: Lufthansa's takeover of ITA, formerly Alitalia.
However, not even that was enough. The concessions made by Iberia to get the go-ahead for the takeover - unthinkable only a few months ago - were not enough for Brussels, which had until 20 August to make its decision public.
Rumours in recent hours had already pointed to a firm rejection of the takeover, and so IAG decided yesterday to step up and bring forward its presentation of the group's results (scheduled for publication today), announcing its decision to backtrack on the purchase. The hope was that, in the process, this would give investors time to digest the news before the stock markets opened on the last trading day of the week.
"We regret Brussels' refusal to accept this ambitious proposal that, in our view, guaranteed consumer rights, allowed our customers to have direct connections to the east of the planet and encouraged competition between hubs in northern and southern Europe," airline sources said just before the results presentation. "The purchase of Air Europa is no longer among our objectives," they stated.
Pending market reaction on Friday, Iberia yesterday tried to send a message of calm to its shareholders, recalling that its priorities now are to "consolidate financial robustness, develop the leadership of our hub in Madrid and ensure the long-term future of the handling and maintenance businesses."
After reporting a profit of 905 million euros for the half year, down 1.7%, the holding company made the surprise announcement that it will resume dividend payments. For nearly five years dividends have been suspended. In 2020 it was decided not to pay the 2019 complementary dividend due to the impact that the pandemic generated in the accounts of the entire airline industry.
In brief, IAG's board of directors has approved the dividend of 0.030 euros gross per share in cash on account of the 2024 financial results, which will be distributed to shareholders in September.
Air Europa said yesterday that it will continue with its strategic plan, strengthening air connectivity between Europe and America. The airline chaired by Juan José Hidalgo defended its company position that it continues to be "profitable, solvent and with a future independently of IAG." In a letter sent to staff, signed by CEO Jesús Nuño de la Rosa and managing director Richard Clark, these senior executives insisted that their mission is "sustainable in the long term and on its own."
Publicidad
Publicidad
Publicidad
Publicidad
Reporta un error en esta noticia
Necesitas ser suscriptor para poder votar.