At the Globalia headquarters in Llucmajor there was a sense of calmness yesterday following the announcement of IAG's planned takeover of Air Europa. Some employees told the media that they weren't authorised to say anything. The majority had, however, been unaware of the potential acquisition and had only learned about it in the press.
Air Europa employs some 3,800 people in all, 950 of whom are based in Majorca and the Balearics at the headquarters and the three airports. These include pilots and cabin crew.
Despite the calmness, there will be uncertainty, not least because of the potential for operations to be centred in Madrid. There could also be ramifications for supplier businesses in the Balearics. The acquisition hasn't of course been confirmed, as competition regulators will be studying it.
If it does go ahead, it will make a huge difference to Globalia as a business. Fifty-two per cent of group revenue comes from Air Europa. The hotel chain, Be Live (plus the smaller Melody Maker brand), contributes just five per cent of annual revenue. The second largest business area consists of the travel agencies, e.g. Halcon Viajes, and online activity; this accounts for 29% of revenue.
President Armengol said yesterday that she had been assured by Air Europa and Iberia management that jobs in Majorca will be maintained.
The IAG Group may have to give up some of the routes that belong to Iberia and its subsidiaries to other national or international airlines to avoid unfair competition.
IAG, which already owns British Airways, Iberia, Vueling and Aer Lingus, has snapped up Air Europa for 1 billion euros, merging Spain’s two biggest airlines.
In the first nine months of this year, Iberia, Vueling, Air Nostrum and Air Europa accounted for more than 72% of passengers on domestic flights at Palma airport and a similar percentage nationwide, according to AENA data.
Data shows Air Europa at the top of the list with 1,528,645 followed by Iberia Express with 566,415, Vueling with 1,818.311 and Air Nostrum with a total of 547.986. Ryanair transported 1,159.448 domestic travellers during the same period, making it one of IAG’s biggest competitors.
The professor of the Department of Business Economics of the University of the Balearic Islands, Aleix Calveras, believes that IAG’s acquisition of Air Europa will effect competition in the Balearics and in the rest of the country.
“The first danger will be its impact on competition and prices, as noted by analysts when the deal was announced on Monday,” he said, “but we’ll to wait for the reaction from the competition authorities, who will often set conditions in situations like this.”
Calveras also said that there’s little doubt that the IAG-Air Nostrum deal will strengthen the Madrid hub "even though Son Sant Joan may lose out."