The planned purchase of Air Europa by Iberia will not now go ahead. IAG announced on Thursday that it has abandoned the purchase because of demands made by the European Commission.
Globalia, the Mallorca-based group that owns Air Europa, entered into negotiations for the sale of the airline to Iberia five years ago. Agreeing a price was one thing; convincing the competition authorities was quite another. The European Commission has never looked upon the sale favourably.
IAG says it has come to the conclusion that, in the current regulatory environment, continuing with the operation would not be in the interest of shareholders. Consequently, IAG will have to pay Globalia 50 million euros for terminating the agreement to acquire 80% of Air Europa shares; it currently holds a 20% stake.
The most recent proposal from IAG was for the transfer of 52% of connections operated by Air Europa. This was 12% more than the previous proposal, but it still didn't satisfy the European Commission.
Several airlines had expressed an interest in taking over Air Europa routes; Ryanair was one of them.