BUSINESS NEWS


IAG agrees €500m deal for Spain’s Air Europa


Ian Taylor


British Airways owner IAG announced a €500 million, cut-price deal to acquire Air Europa last week and now just requires regulatory approval for the takeover to proceed. IAG originally agreed a €1 billion


deal for Air Europa in November 2019. Not only has the cost of Spain’s third-largest carrier been halved but Air Europa owner Globalia agreed to defer payment for six years from the deal’s completion. Air Europa will join Iberia and


Vueling in the group, giving IAG control of Spain’s three leading airlines. IAG said the deal would transform Madrid “into a true rival to Amsterdam, Frankfurt and Paris Charles de Gaulle”, with chief executive Luis Gallego arguing: “Being part of a large group is the best guarantee to overcome current challenges.” Iberia will absorb Air Europa but


retain the carrier’s brand and operate its fleet of 52 aircraft separately, at least initially. The deal remains subject to


Norwegian state loan depends on fresh investment


Norwegian Air hailed a loan offer from Norway’s government as “significantly increasing” its chances of survival as it attempts to exit insolvency protection by March. But the airline’s own


travelweekly.co.uk


investment prospectus cast doubt on the outcome. The Norwegian government


Air Europa is Spain’s third-largest carrier


European Commission approval, which IAG expects in the second half of this year. However, competition authorities appear likely to take a close look despite the current crisis in aviation. When IAG first announced


the deal in late 2019, it expected regulatory approval by the second half of 2020. But in May last year, IAG confirmed: “We still have to go through the full regulatory approval process.” Ryanair chief executive Michael


O’Leary has said “we’ll be looking for the competition authorities to require divestments” and trade union Unite


urged the EC to halt the takeover last year claiming it had identified “serious competition concerns”. A leading aviation analyst told


Travel Weekly: “This will give IAG the two main airlines operating to Latin America out of Madrid and all the connecting traffic. It would appear to materially affect the competitive dynamics.” Air Europa secured a six-year loan


of up to €475 million from Spanish state-owned holding company SEPI in November – almost as much as the price of the takeover. That was on top of a €141 million loan guaranteed by the Spanish government last May.


European agency set to recertify Boeing 737 Max


The EU Aviation Safety Agency (Easa) was poised to recertify the Boeing 737 Max to fly in Europe this week, but the head of the agency admitted Easa was “not doing enough” to assess the safety of US-made aircraft before the Max was grounded in 2019. Easa executive director Patrick


Ky said the agency would scrutinise US-manufactured aircraft more closely following revelations that Boeing concealed safety flaws in the Max and the US Federal Aviation Administration (FAA) failed to expose them. A US congressional committee found “grossly insufficient oversight by the FAA”. The Boeing Max was grounded


in March 2019 after two fatal crashes in five months killed 346 passengers and crew. Ky said: “The way we do things


will never be completely the same.” Recertification means airlines


could take delivery of the 737 Max in time for the summer and follows FAA approval late last year and more recent sign-offs in Canada and Brazil. Boeing has modified the flight control system on the Max, which was identified as a critical factor in the disasters.


confirmed the offer of a loan on January 21 and Norwegian Air chief executive Jacob Schram suggested it “increases our chances of getting through the reconstruction”. However, the government’s


statement was more cautious, saying the offer “assumes private investors show up”. Trade and industry minister


Iselin Nybø said: “The government can contribute if Norwegian succeeds with this [plan]. But it is a


demanding process and Norwegian is dependent on bringing in long- term and strategic owners.” The government requires


Norwegian raise at least NOK4.5 billion (£385 million) and win approval from existing shareholders and creditors who stand to lose out. The prospectus for investors


warns: “Even if the company should conclude the restructuring, there is a significant risk [it] becomes insolvent and enters bankruptcy.”


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