IAG Chief Warns Brussels Rules Leave easyJet Bid 'Very Difficult' as Castlelake Deadline Nears

Europe's competition regime is throttling the consolidation its airlines say they need to compete globally, IAG chief executive Luis Gallego has warned, just days before a deadline that could decide the fate of easyJet.

Gallego told the Financial Times that European merger rules make a possible bid for the budget carrier very difficult, while leaving the door ajar to a deal. He said the group is open to everything, not only easyJet, arguing that European aviation must consolidate to compete with rivals in the United States and Asia.

The intervention lands as US private credit firm Castlelake faces a deadline of 26 June to table a formal offer for easyJet, valuing Europe's second-largest budget airline at around £3 billion. Under European ownership and control rules, the Minneapolis-based fund would need a European partner holding majority voting rights to complete any acquisition, fuelling speculation that IAG or Air France-KLM could be drawn in. Air France-KLM chief Ben Smith has said his group could be interested if approached, while stressing it is not actively pursuing a deal.

The obstacle is route overlap. Any tie-up involving IAG, the British Airways and Iberia parent, would create heavy duplication across Western European corridors and face stiff antitrust scrutiny. Gallego wants Brussels to weigh competition between hub airports and transfer traffic rather than focusing narrowly on point-to-point markets.

The warning fits a pattern. IAG abandoned its bid for the remaining stake in Spain's Air Europa in 2024 after the European Commission demanded remedies, and walked away from a stake in Portugal's TAP this year. With easyJet nursing first-half losses of 638 million euros and fresh from relegation to the FTSE 250, the episode lays bare the gulf between Europe's consolidators and the single market's competition orthodoxy.