International Consolidated Airlines Group (IAG) must wait until July 15th to find out if the European Commission will approve its €1.4 billion offer for Aer Lingus or step up its inquiry into the deal.
IAG has made a number of commitments to the commission to allay fears raised at a recent meeting in Brussels involving the group, Aer Lingus and EU competition regulators, about the proposed deal’s potential impact on competition.
As a result, the commission’s competition directorate has extended the deadline on its current inquiry into the offer by 14 days to July 15th. Regulators will have to decide by that date whether they will approve the take over or move to a phase two investigation.
IAG’s bid for Aer Lingus could unravel if the commission were to move its investigation to phase two as the offer would lapse before such an inquiry, which takes up to 90 working days, is completed.
While the competition directorate refused to comment on the actual investigation, a spokeswoman played down the significance of the deadline extension, pointing out that this is routine in cases where one of the parties submits proposals to deal with competition concerns.
The commission confirmed on Thursday that IAG, parent of British Airways, Iberia and Vueling, had outlined in a formal submission how it intends to tackle the issues competition raised at last week's meeting.
The commission’s mergers’ watchdogs raised concerns with IAG over some aspects of its €1.4 billion bid for Aer Lingus at a meeting attended by both companies in Brussels earlier this week.
The mergers watchdog is understood to have questioned whether a takeover of Aer Lingus would hamper competition in the market for valuable landing and take-off slots at London’s Heathrow Airport. The watchdog is also believed to have raised concerns related to the Dublin-Chicago route.
Sources say that it is unlikely that IAG is offering to surrender Heathrow slots used by its subsidiary, British Airways, to serve Dublin routes. The group has already pledged to give a legally binding commitment that Aer Lingus’s 23 slots at the London airport will not be sold without the Government’s agreement.
Earlier this week, IAG said Spain's Banco Santander has agreed to join with a number of other banks to provide the group with a €1.4 billion loan to help it fund the acquisition of Aer Lingus.
Banco Santander has teamed up with Deutsche Bank Luxembourg, Bank of America and BA in providing a bridge facility which will be repayable on May 26th 2016.
IAG last week formally announced its offer for Aer Lingus. The company's offer document pledges to preserve Aer Lingus as a separate operating business within the group while maintaining its brand and head office in Ireland.
It also promises to boost connectivity and keep the Heathrow landing slots for seven years, noting it has agreed the basis for legally binding commitments with the Irish Government on these issues.
