March 6, 2020 / 4:06 PM / a month ago

Spanish airline Volotea to take on IAG routes to ease Air Europa deal concerns

MADRID, March 6 (Reuters) - Spanish airline Volotea has signed a preliminary agreement to buy several of IAG’s routes to help fend off antitrust concerns over the British Airways parent’s 1 billion euro ($1.13 billion) acquisition of rival carrier Air Europa.

IAG announced the deal in November, betting that Air Europa’s routes between Europe and Latin America and the Caribbean would help drive future growth. However, the takeover sparked competition concerns in Spain, where both companies have a strong presence.

IAG owns Spanish flag-carrier Iberia as well as budget airlines Iberia Express, Vueling and Ireland’s Aer Lingus.

Iberia said on Friday that as a preemptive measure to ease any European Commission objections to the merger, it had offered some of its routes to Volotea to bolster competition on the domestic market.

Iberia added that it had sent a copy of the agreement to the European Commission, which has to sign off on Volotea’s suitability as a candidate.

When the takeover was proposed Ryanair CEO Michael O’Leary complained the deal would harm competition and said his company would push Britain’s market watchdog to force IAG to make divestments.

Volotea, which operates some 319 routes around Europe, did not specify which routes were included in the agreement, but said on Friday it plans to open between two and four new hubs in Spain.

European antitrust authorities still need to approve the arrangement, it added.

$1 = 0.8831 euros Reporting by Nathan Allen; Editing by Inti Landauro and Kirsten Donovan

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