Regulatory scrutiny presaged IAG's backing away from Air Europa
December 17, 2021
The European Commission says the now-collapsed takeover of Air Europa by IAG-unit Iberia would not have met competition regulations designed to ensure affordable connectivity. IAG announced on 16 December that it was terminating the deal that was originally agreed in November 2019, a process that will see it provide €75 million ($85 million) in severance fees to Air Europa owner Globalia. The European Commission launched a phase II investigation into the merger in June, which concluded it would have negatively affected competition on some domestic, short- and long-haul routes within, to and from Spain. Writing following the official cessation of the deal, executive vice-president Margrethe Vestager, in charge of competition policy, says that although IAG offered remedies, "taking into account the results of the market test, the remedies submitted did not fully address our competition concerns". "Competitive transport markets offer connectivity with a wide offering of affordable flights. This should be preserved for when demand returns fully and travelling picks up once again," she continues. Analysis shows that the deal would have given IAG a dominant position in much of the Spanish domestic and transatlantic Latin American market. However, IAG hinted that it is still interested in taking a stake in the Spanish carrier. In its statement to stock markets issued 16 December, IAG says it and Globalia will "evaluate, before the end of January 2022, alternative structures that may be of interest to both companies and offer significant benefits for their shareholders, customers and employees".
IAG to scrap Air Europa acquisition
December 16, 2021
Iberia parent IAG has confirmed that it is in advanced talks with Spanish travel company Globalia to terminate an agreement to acquire Air Europa. Spanish flag carrier Iberia had agreed to acquire the entire issued share capital of Air Europa, which is owned by Globalia. The deal was signed on 4 November 2019 and amended on 20 January 2021. "A further update on the discussions will be made in the future, as appropriate," states IAG chief financial officer Stephen Gunning.
Flair to lease 14 more Max 8s and operate 30 aircraft by mid-2023
December 16, 2021
Flair Airlines plans to lease 14 additional Boeing 737 Max 8's aircraft to complement the nine it has in service and four on order. The Canadian ultra-low-cost carrier provided no details on plans for the Max leases, but has set out a timetable for its planned fleet growth. Flair has three 737NG's in service, along with the nine Max 8's, fleets data shows. The listed owner of the four on-order Max 8's is 777 Partners, a 25% shareholder in Flair from which the airline in January disclosed plans to lease 13 Max 8's. Edmonton-based Flair expects to have 20 aircraft in total by summer 2022 and 30 by mid-2023, and says "additional aircraft will arrive in 2023" as it "more than doubles its current fleet size as part of the airline’s vision to have a fleet of 50 aircraft by 2025". Flair is focusing on the Max because its fuel efficiency offers low passenger-mile cost and reduced carbon emissions, chief executive Stephen Jones said during a virtual press conference on 14 December. Leasing additional Max aircraft is both a show of faith in Boeing and a sign of optimism in recovering Canadian travel demand as Flair aims to expand in the face of growing competition. The ULCC flies to 32 destinations across Canada and the USA, and plans to add Mexico to its network in February. Expanding into the Caribbean would be "the natural next step" for the airline once it starts flying to sun destinations in Mexico, Flair chief commercial officer Garth Lund said during the press conference. Flair has no scheduled routes to New York, but Jones says "it won't be long" before the airline adds that destination to its network. Growth of the ULCC sector in Canada has been limited by the lack of smaller, secondary airports that offer lower costs for airlines compared with big hubs. Lund says Flair is "a first mover" in Canada's growing low-cost market, giving it a good position to compete with low-fare flights on routes that have traditionally been high-cost. "There has been a lot of demand particularly on transcontinental services", with low fares on some routes including Toronto to Vancouver, Lund notes. "We see very good demand" in Toronto, he adds, ahead of the airline's planned expansion there in 2022. Flair and its existing ULCC competitor WestJet subsidiary Swoop will have to face off against new low-cost start-ups next year. Lynx Air, rebranded as a ULCC from Enerjet, aims to launch during the first quarter of 2022 with a fleet of three Max 8's and routes to be announced in the coming months. Canada Jetlines also plans to launch during the first quarter of 2022. While joking that "imitation is the sincerest form of flattery", in reference to Lynx's aim to launch with a fleet of Max 8's, Jones says the "Canadian market needs good, strong, low-cost competition". Lund predicts that as ULCC competition grows "you will probably see some of the high-cost competitors focus on more high-yield markets". As for whether demand for low-cost travel in Canada can grow to help sustain the launch of new routes from multiple ULCCs, Lund says: "I am not sure all of [the airlines] are going to survive." However, he is confident that Flair is well-positioned for more competition. Flair plans to accelerate its fleet growth as the spread of Covid-19's Omicron variant adds uncertainty to international travel. Canada reports that 76% of its population is fully vaccinated against Covid-19, compared with 60% of people in the USA. Progress on vaccination drove Ottawa to loosen restrictions on non-essential travel from the USA in August, prior to lifting restrictions in September for all international arrivals. Boeing has resumed deliveries of Max jets to Canada since that nation lifted its grounding of the aircraft in January. Flair's Miami-based part-owner 777 Partners has ordered 68 Max jets from Boeing during 2021.