British Airways owner IAG abandons plan to buy Air Europa for second time

IAG, which also owns Aer Lingus, Iberia and Vueling, announced the end of its pursuit of Air Europa on Thursday (1 August) blaming the "current regulatory environment" for the move.

The decision came just hours before revealing an operating profit of €1.3 billion for the first half of 2024 – up by 3.9% on the same period last year – thanks to “continued robust demand” for travel across its airlines.

It is the second time that IAG has ended its long-running plans to buy Air Europa – IAG pulled the plug on a previous deal in 2021 before reviving its bid for the Spanish airline in early 2023.

Luis Gallego, IAG’s chief executive, said: “We believe this decision is in the best interests of our shareholders. IAG remains committed to its strategy, including competing effectively from its Madrid hub. This is a strategy which is delivering strong results.

“We will continue to develop our presence in Madrid so that the hub can develop as a rival to Europe’s largest hub airports.”

IAG recorded total revenue of €14.7 billion for the first half of 2024, an increase of 8.4% on the same period of last year.

Gallego said that IAG was benefiting from “continuing strong demand for travel” in its core markets within Europe and on transatlantic routes to North and Latin America. Although the company also noted “some softness” in long-haul fares from Dublin and within its Asian markets.

IAG expects its overall capacity for the key summer period from July to September to be around 7% higher than the same period last year.

The company added that its three main priorities in the next few years included transforming British Airways to “drive higher customer satisfaction, profits and margins”.

IAG said that BA has “invested significantly” to improve its operational performance from 2023, including the implementation of a new operating model at Heathrow.

This helped the airline to achieve an on-time performance (OTP) of 75.5%, which was a 15 percentage point improvement compared with the first six months of last year.

IAG also announced it would pay shareholders a dividend of €0.03 per share – the company’s first payout since the Covid-19 pandemic.