BA parent IAG to buy Spain's Air Europa in €1bn deal

Spanish carrier Air Europa will become part of the British Airways family and a 'value' arm of its Madrid neighbour and new BA-owned sibling Iberia, following a €1bn deal inked overnight by BA's parent International Airline Group.

Should the deal not fall afoul of Spanish government concerns over lack of competition, Air Europa would also leave the SkyTeam alliance and could potentially become a Oneworld Connect member alongside the likes of Aer Lingus.

IAG has already confirmed that Air Europa will be adopting Avios as its frequent flyer currency, in a move which will open up additional points-based reward seats for travellers on Air Europa's extensive network across Europe and the Americas.

Air Europa flies to 69 destinations across Europe and the Americas.

"Acquiring Air Europa would add a new competitive, cost effective airline to IAG, consolidating Madrid as a leading European hub and resulting in IAG achieving South Atlantic leadership," said IAG Chief Executive Willie Walsh.

Aer Europa will be positioned as a 'value' airline in the IAG portfolio, slotting under full service players British Airlines and Iberia but ahead of declared low-cost carriers; the airline's international Airbus A330 and Boeing 787 fleet all sport business class cabins, albeit in an older less-competitive design than that of Iberia.

Aer Europa will slot into the middle of IAG's airline portfolio and likely be rebranded to join Iberia Express.

While IAG has promised "Retention initially of the Air Europa brand", the qualifier indicates Air Europa will be folded into Iberia Express.

However, the €1bn buyout is certain to raise eyebrows given that, along with flag-carrier Iberia and low-cost Vueling, IAG's ownership of Air Europa would see it collectively account for 84 percent of seats in the domestic Spanish market, according to the Centre for Aviation (CAPA) and hold a monopoly on nine major domestic routes.

IAG maintains that its strategy will enable Madrid to become a Spanish 'super-hub' competing with major European airports such as London/Heathrow, Frankfurt, Amsterdam and Paris/Charles de Gaulle.

David Flynn

David Flynn is the Editor-in-Chief of Executive Traveller and a bit of a travel tragic with a weakness for good coffee, shopping and lychee martinis.