EXCLUSIVE-IAG likely to be warned by EU on Air Europa deal, sources say

Credit: REUTERS/Borja Suarez

By Foo Yun Chee

BRUSSELS, Feb 29 (Reuters) - British Airways owner IAG is likely to be hit with an EU antitrust warning over its 400-million-euro ($434 million) bid to buy out Air Europa, suggesting regulators want IAG to beef up its offer of remedies, people familiar with the matter said.

IAG ICAG.L, which also owns Spanish carrier Iberia, submitted proposed concessions on Feb. 23 in a bid to address competition concerns but did not provide details.

The European Commission in January said the deal may reduce competition on Spanish domestic routes to the Balearic and Canary islands, and on short-haul routes between Madrid and the main cities in Europe, Israel, Morocco, Britain and Switzerland.

The EU competition enforcer also cited concerns over long-haul routes between Madrid and North and South America.

Both the Commission and IAG declined to comment.

The company can still avoid the watchdog's so-called statement of objections, or charge sheet, by adding more remedies in the coming days.

IAG's remedies are similar to those in the Korean Air-Asiana deal, where the South Korean carriers ceded slots and traffic rights as well as access to planes, bowing to a demand from the EU enforcer, one of the sources said.

IAG and Air Europa scrapped a previous deal in 2021 after EU regulators indicated their remedies were insufficient to alleviate the competition concerns.

Regulators had then voiced worries about overlaps on some 70 routes. A similar number of overlapping routes in the current deal is also troubling the enforcer.

($1 = 0.9223 euros)

(Reporting by Foo Yun Chee; Editing by Alex Richardson and Mark Potter)

((foo.yunchee@thomsonreuters.com; +32 2 585 2866; Reuters Messaging: foo.yunchee.thomsonreuters.com@reuters.net))

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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