The ongoing Air Europa acquisition saga, which was considered pretty much a done deal in February 2023, with Iberia agreeing to take over Spain’s second largest airline, is facing further scrutiny by the Directorate-General for Competition of the European Commission.

On April 24, 2023, the Financial Times reported that sources close to the matter had said that the case “didn’t look good” and that in some ways the proposed acquisition of Air Europa by Iberia was “even worse” than when it was first presented to the European authorities, back in 2021.

Although the terms of the deal have been widely publicized, with IAG paying €400 million, and converting a pre-existent €100 million loan into equity, the companies have yet to file the relevant documentation with the European authorities in order to get full control of Air Europa.

Nevertheless, the Commission’s Competition Directorate General is thought to have started its own enquiries into the matter, since there is concern that competition could be severely limited in some key markets, domestically in Spain and in routes between Spain and Latin America.

Both Iberia and Air Europa considered the latter market of strategic importance and deployed a sizable chunk of their long-haul capacity to routes linking multiple points across the Americas to their Madrid hub.

While it may be relatively straightforward for other operators, such as low-cost carriers, to enter the domestic and European routes where the merged airline achieved a dominant position as a result of the deal, it may be harder to get new operators to compete with the merged airline in the transatlantic market.