Subject
The outlook for European airlines following IAG's takeover of Aer Lingus
Significance
The takeover of Aer Lingus by the International Airlines Group (IAG) is another step in the rationalisation of the European airline industry. IAG will be able to consolidate its position in the key North Atlantic market and its dominance of the London Heathrow hub. The deal also confirms IAG's British Airways (BA) as one of Europe's more resilient legacy airlines, in the face of competition from Gulf-based counterparts and low-cost carriers (LCCs).
Impacts
Facing a legal requirement to divest 24% of its 29% Aer Lingus stake, Ryanair is likely to approve the IAG takeover.
Uncertainty over new runway capacity in London may encourage IAG to develop Dublin as a subsidiary hub.
Development for Aer Lingus in Ireland could boost the Irish government ahead of next year's election.
Lufthansa and Air France-KLM appear to have increasingly limited options and are likely to continue to struggle.
A split in the Association of European Airlines over liberalisation will weaken legacy carriers' ability to influence policy.
