IAG share price: Group’s deal with LATAM causes more competition concerns

on Nov 23, 2016
Updated: Oct 21, 2019

International Consolidated Airlines Group’s (LON:IAG) deal with LATAM Airlines has caused more competition concerns, with Chile’s regulator saying that the tie-up on certain routes risks increasing fares and lowering quality. The news comes after Brazil’s competition watchdog recently warned that the agreement could have a negative impact on routes between Brazil and Europe.

IAG’s share price has gained ground in London this morning, having added 0.48 percent to 455.90p as of 08:09 GMT. The advance is largely in line with gains in the broader market, with the benchmark FTSE 100 index currently 0.67 percent up at 6,865.57 points. The group’s shares have lost a fifth of their value over the past year, and are down by more than a quarter in the year-to-date.
Reuters reported yesterday that Chile’s FNE competition regulator had said that the joint-business agreement which Santiago-headquartered LATAM Airlines inked with American Airlines, and IAG’s British Airways and Iberia risked increasing fares and lowering quality on routes. The opinion, in a 163-page document elaborated by the FNE and seen by the newswire, could increase the chances that Chile’s TDLC anti-monopoly court nixes the deal.

“The present operation creates a risk of increasing fares and decreasing the quality of routes encompassed in the geographical area of the agreement since both parties would be acting as a single economic agent, with important market participations,” the document said.
IAG and LATAM inked a deal in January which will see them cooperate commercially on flights between the EU and South America, and would expand their codeshare arrangements to increase the number of destinations offered to customers. The deal, however, has also caused concerns in Brazil, with the country’s competition regulator saying earlier this month that it had submitted the analysis of the agreement to its Tribunal, having concluded that it could have a negative impact on routes between Brazil and Europe.
As of 08:38 GMT, Wednesday, 23 November, International Consolidated Airlines Grp share price is 455.90p.

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