BA owner acquires Air Europa

€1bn bid will boost company activity to South America, though Ryanair says takeover is bad for competition

IAG, parent company of BA and Iberia, has announced a €1bn (£860m, $1.1bn) takeover of Spanish airline Air Europa.

The aim is to increase its presence on routes to Central and South America and the Caribbean. Air Europa is the third largest Spanish airline after Iberia and Vueling and serves 69 destinations with a fleet of 66 aircraft.

IAG (International Airline Group) has long hankered after boosting its operations to Central and South America. This year, with partners American Airlines and LATAM Airlines, it saw a proposal to reshape international air travel in the region rejected by the Chilean court.

The takeover has still to be approved by regulators. The expectation is the airline giant may have to shed other routes to win that backing.

Ryanair CEO Michael O’Leary has said his company will ask the UK’s market watchdog to force IAG to make divestments. The deal, he said, would be bad for competition.

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Air Europa will initially keep its brand. Once it gets integrated into the existing IAG hub at Madrid it will be a standalone operation run by Iberia boss Luis Gallego.

“This is of strategic importance for the Madrid hub, which in recent years has lagged behind other European hubs,” said Gallego. He added Madrid had the potential to serve as a gateway between Asia and Central/South America.

IAG also owns Iberia Express, Level, Aer Lingus and Vueling.

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