via the European risk of the skies (which also concerns Ita Airways) – Corriere.it
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The European risk of the skies officially starts with a late evening note. IAG – the Spanish holding which includes British Airways, Iberia, Vueling, Aer Lingus and Level – has decided to take over the entire Iberian company Air Europa: after taking over 20% by paying 100 million euros, it will now also buy the other 80% for 400 million euros, paying a total of half a billion, half of what it had expected to pay out shortly before the Covid.
The balances
The consolidation process of the sector also in Europe is thus concentrated towards those hubs which are gateways to South America and Africa. If, in fact, Air Europa ends up in Iag (consolidating Madrid as a reference airport), the Lufthansa group is in talks to join Ita Airways (adding Rome Fiumicino to its list of hubs), while in all probability Tap Portugal (and Lisbon) – which will soon be put up for sale – barring twists and turns it will end up within the perimeter of Air France-Klm. Air Europa — which flies to the continent, but also to Latin America and the Caribbean — carried 10 million passengers in 2022 (there were 13.1 million in 2019, pre Covid), has a fleet of 50 aircraft and will lease another 15 .
The payments
The Iag operation (which closed 2022 with 1.3 billion in profits against the red of 2.8 billion in 2021) will take up to 18 months, so it will take to get the go-ahead from the various regulatory authorities. Once the authorization of the competition authorities has been obtained, the first payment of 200 million euros will be made, 100 million in cash and 100 million in IAG shares, explains a note. The other two payments, of 100 million euros each, will be made on the occasion of the first and second anniversary of the approval by the competition authorities. In the event of breakage, Iag will pay a penalty of 50 million euros. The financial notes do not mention the one billion euro of debts that Air Europa has accumulated with the Spanish state.
The strategies
In a document shown to analysts in 2019, IAG explained that Air Europa will end up in the Value segment of the holding’s airlines, together with Aer Lingus and Iberia Express, the regional division. In the Full service block there are British Airways and Iberia, in the Low cost Vueling and Level. According to Goodbody analysts this move will further consolidate the European skies. The programming for the next summer season shows that Iberia will have 40% of the market share on routes between Spain and Central and South America, while Air Europa will have another 25%: for a total that will reach 65%. For this reason, the approval of the Antitrust will require IAG to cede something in terms of routes and frequencies.
The consolidation
In the next two-three years, the European skies should thus consist of a few large companies: the Ryanair group, the Lufthansa group (probably with Ita), the Air France-Klm group (with Tap), the Iag holding (with Air Europa ). According to analysts it is probable that easyJet and Wizz Air will be forced by market conditions to join one of the European groups or to merge, while the Scandinavian Sas, the Greek Aegean, the Polish Lot and the Finnish Finnair should find a bigger home. It is worth mentioning that the main shareholder of IAG is the Government of Qatar which through Qatar Airways holds 25.2% of the shares.
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