British Airways owner IAG backs out of buying Spain’s Air Europa

British Airways owner IAG said Wednesday it no longer intended to complete its purchase of Air Europa, although it would still like close cooperation with the Spanish airline.

air europa plane
IAG already owns two leading Spanish airlines, Iberia and Vueling. Photo: Manuela Picq / AFP

IAG initially agreed to pay €1.0 billion  just months before the Covid-19 pandemic broke out.

At the beginning of 2020 IAG said it had reached an agreement to cut that price in half and delay payment for six years, but the continued difficulties that airlines are facing have scuttled the purchase.

“Unfortunately, because of the devastating effect of the pandemic, the conditions are not favorable” for the deal to go through as is, said IAG chief executive Luis Gallego.

But as “Air Europa operations are very important from a strategic point of view” for IAG it would look at other ways they could cooperate, he said.

Air Europa’s current owner, Globalia, declined to comment when contacted by AFP.

IAG already owns two leading Spanish airlines, Iberia and Vueling.

It had hoped the acquisition of Air Europa would allow it to expand routes to Latin America and the Caribbean.

The deal faced potential objections from European regulators as it would eliminate competition on certain routes.

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New era for Spain’s Zara empire as Ortega heiress takes over

Marta Ortega on Friday took the reins of Zara-owner Inditex, the group founded by her father, and faces an immediate challenge after the fashion giant closed shops in Russia, its second biggest market.

New era for Spain's Zara empire as Ortega heiress takes over

With neither fanfare nor ceremony, the 38-year-old daughter of multibillionaire Amancio Ortega took over the world’s biggest fashion retailer and its 6,500 shops.

“I begin this stage…with a deep sense of responsibility,” Ortega wrote in a letter to the 174,000 employees of the group, which has eight brands including Massimo Dutti, Bershka and Stradivarius.

“I ask for your support and patience while I continue to learn from everyone every day,” she added.

The youngest of Ortega’s three children, she was in charge of design and product launches across all of Inditex’s brands before becoming chairwoman on Friday, taking over from Pablo Isla who had run the group since her father retired in 2011.

As her father’s right hand, Isla oversaw Inditex’s massive international expansion over the past decade.

Marta Ortega’s promotion has been on the cards for several years but was only announced at the end of November as part of a reorganisation engineered by her father, now 86.

Anna Wintour, Marta Ortega and Diane von Furstenberg attending the CFDA / Vogue Fashion Fund 2019 Awards at Cipriani South Street in New York City on November 5, 2019 .

Anna Wintour, Marta Ortega and Diane von Furstenberg attending the CFDA / Vogue Fashion Fund 2019 Awards at Cipriani South Street in New York City. Photo: Jamie McCARTHY / GETTY IMAGES NORTH AMERICA / AFP

“We’ve been preparing for this transition for a while,” said Isla at the time. “Marta has been working in the company for 15 years … she knows it very well”.

‘Very well prepared’ 

Described as discreet and reserved, Marta Ortega was born on January 10, 1984 to the billionaire and his second wife Flora Perez, growing up in La Coruna in northwestern Spain with her half-sister Sandra and half-brother Marcos.

After attending a Swiss boarding school and graduating in 2007 from the European Business School in London, she briefly worked on the shop floor at a Zara store in the British capital to understand how things operate.

Although she never said she was the Inditex owner’s daughter, her colleagues told El Pais newspaper they quickly figured it out after noticing her Rolex watch.

“The first week, I thought I was not going to survive. But then you get kind of addicted to the store” she told The Wall Street Journal in a rare interview in August 2021.

When her appointment was initially announced in November, it caused concern in the business community, triggering a fall in the company’s share price but such fears appear to have evaporated.

Although she has never held an executive role at Inditex, she is “well prepared” and will be “surrounded by good people” said Alfred Vernis, professor at Spain’s ESADE business school and a former Inditex executive.

Working with her is Oscar Garcia Maceiras, who recently took over as chief executive of Inditex barely a year after joining the group from Spanish banking giant Santander.

“He will be the one who takes executive decisions,” said Vernis.

A difficult moment

The change at the top comes at a pivotal time for the Galicia-based company which has chalked up record profits in recent years but is now facing one of its most difficult moments.

People pass by a Zara shop in Barcelona on January 7, 2017.

People pass by a Zara shop in Barcelona on January 7, 2017. Photo: JOSEP LAGO / AFP

Worth some 62 billion euros, Inditex nearly tripled its profits last year to 3.2 billion euros, but its outlook for 2022 has been overshadowed by Russia’s invasion of Ukraine.

At the start of March, the retail giant suspended all retail activity in Russia, its biggest market after Spain, shutting its 502 shops and suspending all online transactions.

The move is likely to have a significant impact on its results, with the Russian market accounting for nearly 10 percent of sales.

“The current financial year promises to be very complex, due to Inditex’s exposure in Russia and the rest of Europe” and “rising production costs” caused by record inflation, Credit Suisse said in a note.

Founded in 1985 by Amancio Ortega, Inditex must also strengthen its online offering in the face of stiff competition from other retailers.

Above all it must step up its “green transition” in order to reduce its environmental impact, which is huge.

“Pablo Isla was doing it but not enough,” said Vernis, indicating such an essential step “would cost” the company.

Shares in Inditex closed up 1.67 percent at 20.11 euros.

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