"Acquiring Air Europa would add a new competitive, cost effective airline to IAG, consolidating Madrid as a leading European hub and resulting in IAG achieving South Atlantic leadership, therefore generating additional financial value for our shareholders.” - IAG Chief Executive Willie Walsh
When news hit that Air Europa would be taken over by airline conglomerate IAG, people I spoke to were mixed in their feelings. Some worried it would mean the elimination of jobs at the Mallorca-based airlines, other viewed it as a way to make Spain a far bigger hub for flights from across the pond, creating job opportunities in its wake. Either way, the merger is happening, and Affordable Mallorca is here to give you the facts as we know them now.
History of Air Europa #
Air Europa was founded in 1986 as a private company with headquarters located in Llucmajor. Back then, it flew holiday charters from Mediterranean resorts and European cities. The main hub was Madrid’s Adolfo Suárez Madrid-Barajas Airport, but Palma and Tenerife were heavily focused on.
After the company’s parent company, British owned ILG-Air Europe Group stopped trading in 1991, a group of investors headed up by Juan José Hidalgo acquired Air Europa and it was then it became the first non-state owned carrier to operate national scheduled flight service in Spain, effectively breaking the stranglehold Iberia had on the Spanish market.
Today the company employs roughly 3,800 people, including nearly 1,000 in the Balearics, and is the third largest carrier in the country after Iberia and Vueling, flying to over 44 destinations around Europe, North and South America, the Caribbean and North Africa.
The Take Over #
International Airline Group (IAG), the airline juggernaut who counts British Airways, Iberia, Vueling, and Aer Lingus among its holdings, signed a transaction agreement to buy Air Europa for an estimated €1 billion. The company is looking at the deal being completed by the second quarter of 2020. The merger means that IAG holdings would now control 84% of the seats sold domestically in Spain and is poised to make Madrid a hub in the same way Heathrow is for BA.
The procurement of Air Europa is slightly different to previous IAG sales, in that it is not attempting to gain a foothold in a new market, but rather using an already established market to expand services, primarily to the Caribbean and South America, and to make Spain a more competitive and accessible hub.
For the moment, there is no plan to change the name, and the brand is going to remain separate. Passengers will be able to enjoy benefits of the other IAG brands, and can claim AVIOS miles, as well as it being fairly safe to say they will soon be incorporated into the OneWorld Alliance.
Plan for Mallorca #
IAG has publicly stated they have no plan to move the airline’s headquarters away from Mallorca once the company is fully integrated. Furthermore, no job cuts are forecast, and the current growth and expansion forecasts are still on track.
The company has reminded Air Europa employees and their unions that when they took over Vueling, it was pretty much business as usual and they intend the same thing to happen here. Their headquarters remained in Barcelona, made their own decisions and operated independently.
Despite these assurances, employees have expressed some concern and perhaps with good reason, as IAG has also stated there will be a certain amount of reorganisation necessary to make this all work.
Right now, all is speculation, and no one knows what will actually happen. My thought is that the airline’s buyout will open up new, direct routes to and from the island opening up some previously “complicated” routings.
It has already been reported that Norwegian is interested in a NYC-Palma flight, with the possibility of direct access from Philadelphia and Boston as well. Canada Air Transat has expressed interest in direct flights from Toronto. Rumours about direct flights to Dubai have also been swirling. So, the chances of this new merger opening other major cities up is fairly good, especially those emanating from South America, where expansion efforts are reportedly being targeted.
To me, this merger is a good thing for the island, a chance to open it up to the kind of tourist the Tourism Board is angling for… worldly, sophisticated and eager for new experiences.
DISCLAIMER: The above section is purely the author’s humble opinion and in no way reflects the opinions of Affordable Mallorca, nor is it reporting facts. It is conjecture based on previous reports and wishful thinking!
#iagbuyout #aireuropabuyout #juanjosehildalgo #aireuropamallorca #aireuropa
By Stephanie Horsman
8 November, 2019