European airlines are increasingly seeking consolidation to improve competitiveness and expand their network. Air France-KLM has expressed interest in purchasing a stake in Air Europa, owned by Spanish group Globalia. Globalia confirmed this interest on Wednesday but noted that no deal has been finalized yet.
Stake Purchase and Benefits
Spanish newspaper El Economista reported that Air France-KLM is negotiating to acquire up to a 20% stake in Air Europa, with the value potentially exceeding €100 million. The deal would allow Air France-KLM to strengthen its position in southern Europe and expand access to Latin America.
Despite Air Europa posting a profit of €165 million in 2023, the airline could benefit from an infusion of capital through this potential investment.
Regulatory Concerns and Market Impact
The European Commission did not require approval for this smaller stake, as it is unlikely to raise anti-competitive concerns. This comes after IAG’s failed attempt to acquire Air Europa, which collapsed due to regulatory opposition. IAG’s offer of €400 million was rejected over fears it would reduce competition in the airline industry.
Meanwhile, Ryanair’s CEO Michael O’Leary and IAG’s CEO Luis Gallego have voiced support for consolidation in Europe, arguing that without it, smaller airlines will struggle to compete.
Air France-KLM’s Continued Expansion
In addition to its interest in Air Europa, Air France-KLM acquired a 19.9% stake in Scandinavian Airlines (SAS) this year. Lufthansa, another major European airline, is also expanding by acquiring a stake in Italy’s ITA Airways.
