Iberia-Clickair-Vueling surrender slots for merger approval

By David Kaminski-Morrow

European competition regulators have ordered the release of slots at Barcelona and other airports in Europe as the price for clearing Spanish flag-carrier Iberia's proposed takeover of merging low-cost carriers Clickair and Vueling.

Under the proposal Iberia - a minority shareholder in Clickair - would take over the merged entity 'Nueva Vueling' formed by the combination of the two budget airlines.

The European Commission, having assessed the effects of the plan, says the merger raised "serious doubts" over competition on 19 routes - seven international and 12 domestic. Routes to Italy and France have been a particular source of concern.

In a statement the Commission says the "strong position" of the merged carriers on these routes "would have been further strengthened" by their combined share of slots at Barcelona El Prat and Madrid Barajas.

As a result the airlines involved have offered to transfer slots, for free, at these and other destination airports - among them Venice, Rome, Nice, Athens, Naples, Paris and those at several Spanish cities.

These slots would create the conditions for new entrants or current competitors to operate more than 150 additional weekly round-trips.

"We consider that these remedies are likely to considerably facilitate entry for competitors, maintain competitive pressure on the merged entity and thereby benefit Spanish and other European passengers on the affected routes," says the Commission.

Spain's competition authority has withdrawn a request to consider the merger plan.

Clickair will be absorbed by Vueling, providing a capital increase to Vueling but eliminating the Clickair brand.

Barcelona-based Vueling says that the Commission's authoritisation will allow it to move "immediately" towards the next stages of integration. The merger process will double the size of the carrier.

Vueling adds that the approval means the merging airlines will be able to concentrate on providing passengers with a combined summer schedule this year.

"Our board of directors' intention is to foster a swift execution of every action leading to the integration, so that this is concluded in the shortest possible timeframe," it says.

Vueling adds that its aim of becoming profitable this year will be "significantly reinforced" by the Commission's clearance.

© Reed Business Information 2009

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