Back in 2019, International Airlines Group (IAG), the owners of Iberia, British Airways, Vueling, Aer Lingus and others announced its intention to acquire Air Europa for €1 billion to build a Madrid mega hub. As the antitrust negotiations started, COVID appeared and hit airlines like a brick. That put the negotiations on hold for a while, but the parties agreed to continue the takeover, but with a halved price tag.
The first part of the deal was completed in August 2022, when IAG converted its €100 million loan to a 20% share. This week’s announcement outlines how IAG will pay €100 million cash, €100 million in IAG shares to Globalia, and another €100-€100 million on the first and second anniversaries of the merger.
However, the merger (if it will happen) will not be easy: IAG’s Iberia and Vueling are the top two Spanish airlines, followed by Air Europa who together operate most Spanish domestic flights. Therefore, the antitrust negotiations will take a long time: IAG estimates the merger to happen within 18 months. The European Commission already initiated one case regarding the merger.
What Will Happen to My SUMA Miles?
When the merger was first proposed, it was mentioned that Air Europa will quit SkyTeam. That is terrible news for the alliance (as you can see in the paragraph below), but it may be interesting to frequent flyers. It was also announced that Air Europa will adopt Avios and keep its own branding. Previously, we mentioned that Air Europa SUMA is one of the easiest to acquire the SkyTeam Elite Plus tier.
While it’s not guaranteed that Air Europa will join Oneworld (other IAG airlines such as Aer Lingus aren’t Oneworld members), the status will likely be honored by other IAG members. Furthermore, we saw examples of other airlines offering status matches. However, we don’t know how SUMA miles will be converted to Avios, nor which airlines will (if) offer status match programmes. It’s best to wait until more news emerge and then we’ll update the article.
What Will Happen to SkyTeam?
As mentioned above, this is not great news for the alliance. They already de facto lost CSA (the airline operates only one route) and Aeroflot (their membership is suspended). While ITA replaced Alitalia, Lufthansa Group remained the only bidder for the airline, which will potentially drive the Italian airline out of the alliance. TAROM continues to be loss-making since 2008, limiting its growth possibility.
On the other hand, Virgin Atlantic will join the alliance, which will be a win for the alliance. However, it lacks a feeder network and is pretty close to the major European SkyTeam hubs (CDG & AMS). A few years back, SkyTeam had many smaller airlines and three major airlines serving different markets and geographical areas.
Now, their operations will be condensed to two major (but capacity-restricted) hubs, a medium point-to-point (also capacity-restricted) base and to struggling mini airlines. Overall, SkyTeam will likely be condensed to Western Europe, losing the geographical advantages that it achieved with medium-sized members like Alitalia/ITA and Air Europa.
Cover Picture: © Miklós Budai 2019