Air France-KLM Expresses Interest in Air Europa
Air France-KLM has shown interest in acquiring a stake in Spanish airline Air Europa, according to its owner, Globalia. In a statement to Euronews, Globalia confirmed, “There is interest… but currently nothing is closed.”
Air France-KLM has not yet commented on the potential deal. Spanish newspaper El Economista reported that the Franco-Dutch airline group is negotiating to acquire up to a 20% stake in Air Europa.
Deal Valuation and EU Approval
The reported stake is valued at over €100 million, exceeding the amount paid by IAG for a similar share in 2022, El Economista stated. The transaction is unlikely to require EU regulatory approval, as the stake size does not raise anti-competition concerns.
Air Europa, owned by Spanish conglomerate Globalia, made €165 million in net profit in 2023. Despite this, the airline could benefit from additional funding to support future growth.
Strategic Benefits for Air France-KLM
An investment in Air Europa would bolster Air France-KLM’s footprint in southern Europe and provide greater access to the lucrative Latin American market. This comes after IAG, the owner of British Airways and Aer Lingus, abandoned its attempt to take over Air Europa in August 2023.
IAG’s Scrapped Takeover Plans
IAG’s bid, valued at €400 million, failed due to regulatory resistance from the European Commission. The Commission argued that the deal could harm competition, potentially increasing prices for passengers.
Proposed concessions by IAG, such as offering routes to rival airlines, were deemed insufficient to address these concerns. At the time, IAG CEO Luis Gallego explained, “It doesn’t make sense for our shareholders, and that’s the reason we are abandoning the operation.”
Airline Consolidation Faces Regulatory Hurdles
European airlines are increasingly pursuing consolidation to strengthen their networks and improve competitiveness. However, regulatory fears over anti-competitive behavior often complicate such deals.
In March 2023, Ryanair CEO Michael O’Leary urged the European Commission to expedite the approval of mergers. “Ultimately, it is the way forward in Europe,” he said.
IAG CEO Luis Gallego echoed this sentiment, warning that smaller airlines could face extinction without consolidation, leaving them reliant on taxpayer support.
Recent Consolidation Moves
Despite regulatory challenges, Air France-KLM acquired a 19.9% stake in Scandinavian Airlines (SAS) earlier this year. Similarly, Lufthansa is in the process of purchasing a stake in Italy’s ITA Airways.
These moves signal a growing trend of mergers and acquisitions among European airlines, aiming to navigate financial pressures and competitive markets.
