Franco-Dutch airline group Air France-KLM is exploring the purchase of a stake in Spanish carrier Air Europa, according to a statement by Air Europa’s owner, Globalia, on Wednesday.
“There is interest…but currently nothing is closed,” Globalia confirmed in an email to Euronews, following a report by Spanish newspaper El Economista that suggested Air France-KLM could acquire up to 20% of Air Europa. The stake, according to the report, is expected to exceed the €100 million paid by IAG, the parent company of British Airways, for a similar share in 2022.
Air France-KLM has yet to comment on the report.
Strategic Expansion and Financial Support
If finalized, the deal could provide Air Europa with a significant cash injection, bolstering the Spanish airline’s financial position despite its strong performance in 2023, which saw it achieve a net profit of €165 million.
For Air France-KLM, the move would reinforce its presence in southern Europe and enhance its access to lucrative Latin American markets, aligning with its strategy to expand network connectivity and market reach.
Failed Takeover and Regulatory Concerns
The development follows the collapse of IAG’s attempt to fully acquire Air Europa earlier this year. The €400 million deal fell apart in August due to regulatory challenges, with European Commission watchdogs raising concerns about potential anti-competitive impacts that could lead to higher fares.
Although IAG abandoned its acquisition plans, it retains a 20% stake in Air Europa. CEO Luis Gallego remarked that the deal “doesn’t make sense for our shareholders,” citing difficulties in securing EU approval despite offering concessions such as making specific routes available to competitors.
In contrast, analysts believe Air France-KLM’s investment, being limited to 20% of Air Europa, is unlikely to require approval from European regulators, given the relatively small stake size.
Trend Toward Consolidation
The potential deal reflects a growing trend of consolidation in Europe’s airline industry, as carriers aim to strengthen competitiveness and scale amidst rising operational costs and market challenges.
Air France-KLM itself acquired a 19.9% stake in Scandinavian Airlines (SAS) earlier this year, while Lufthansa has been expanding its footprint by purchasing a stake in Italy’s ITA Airways.
Despite concerns over anti-competitive practices, industry leaders have advocated for accelerated consolidation to ensure the survival of smaller airlines.
“If we don’t allow consolidation in Europe, we will destroy airlines in Europe,” IAG’s Gallego said during an industry event in Brussels, echoing calls from Ryanair CEO Michael O’Leary for the European Commission to facilitate mergers.
As discussions between Air France-KLM and Air Europa progress, the outcome could mark another milestone in reshaping Europe’s aviation landscape.
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