Ep 5: How European airline consolidation is progressing

easyJet has recently been the subject of several bids by Castlelake to acquire the airline. The move comes amid a broader trend of M&A activity in the sector. 

In this episode, John Strickland and Garth Lund look at ongoing consolidation among key European airlines. 

What we dive into:

• Castelake's bid for easyJet
• Progress of SAS's integration into Air France-KLM
• TAP bids: Lufthansa Group vs Air France-KLM
• Turkish Airlines' investment in Air Europa
• Pegasus acquisition of Smartwings

Transcript

SPEAKER_01 0:00

Welcome to the latest episode of Airline Insight, the podcast series taking a look at the European airline business and indeed the global airline business, but with a distinctly European slant. I'm John Strickland. I've been around the industry for over 40 years. My experience is in network carriers, low-cost airlines, and I'm always interested in what's going on today in the ever-changing airline world.

SPEAKER_00 0:22

And I'm Garth Lund. I spent uh over a decade in the industry, mainly on the low-cost side of the business.

SPEAKER_01 0:27

Great, let's kick off today. Well, last time, of course, Garth, we talked about uh low-cost carriers in the European space, their results we were awaiting Wiz's actual results. So we'll start off there by taking a quick look at what Wiz told us of their year-end results for financial year 25-26. And then we're going to look at consolidation in Europe, a number of things going on as we speak and uh looking quite different to what we see in the USA. So let's turn to Wiz. We'd surmised that uh, based on their um statement ahead of earnings, that they would be marginally profitable. Indeed, that's the way it turned out. A pretty nominal profit. They'd seen benefits of quite low fuel prices during the last year, but of course that was ending given the last month of the financial year was uh as the war kicked off in Iran. But they still faced quite a number of other challenges, including grounded aircraft and some other airport and maintenance cost rises.

SPEAKER_00 1:21

Yes, so the net profit came in at 1 million, which was down from uh just over 200 million last year. Operating profit, which I think is a better metric for judging the business in this case, came in at 140 million, down from 168 million last year. But as you say, still quite a number of grounded aircraft. So 30 aircraft grounded due to the um GTF powder metal issues at the end of the fiscal year. But they also commented that that's now down since the end of the fiscal year to 24. So still continuing to um trend in the right direction there, I would say, and getting the full fleet operating.

SPEAKER_01 1:58

Yeah, I mean, that's certainly a positive for them after a long, long period of headaches. They hope to have all these aircraft flying again by late next calendar year, but they've still got to bear that pain for now. And uh, as we've seen, quite a number of the increased costs we saw were related to that uh very problem of a number of those aircraft grounded.

SPEAKER_00 2:17

Yes, the unit cost for last year did come in higher by about 6% compared to the previous year. RASC was slightly down, but more or less the same. The fact that there are all those aircraft on the ground has certainly put pressure on the cost structure. And as those aircraft come back online, while it does mean that there will be temporarily higher growth, that growth comes at arguably less of a cost than normal because the fixed costs are to some extent already in the system.

SPEAKER_01 2:45

Yeah, it's a good point. I know it's one we talked about before, Darth. Uh, that capacity growth on the face of it does look pretty strong. I think they commented in the first two quarters, we're talking about double digits, you know, 20 plus percent growth in capacity. And of course, they're having to restructure their network as well. Many of the things that had become key strategies, as we've also referred to on our previous edition, have had to change. They made the decision to get out of Abu Dhabi, they were going to go back to Israel in a big way this year, which they're still going to return, but nothing like the scale of it plan. They had a base envisaged prior to the war. And uh other parts of the network moving capacity around at relatively late notice.

SPEAKER_00 3:24

Overall, I think the business is being refocused back towards Central and Eastern Europe, plus some other markets uh like Italy and the UK. The Iran conflict has also certainly had an impact on the shape of the network, as you say, less capacity going into Israel, for example. And from the commentary in the earnings call, it looks like that has also in the first quarter had a bit of a negative effect on overall capacity. But from what the management team said, that's all been redeployed from the second quarter, which is essentially the summer quarter for WIS.

SPEAKER_01 3:56

Yeah, it looks like we're going to see some improvement in financial performance this year, but perhaps not to the high level as we've seen previously. So it could be a year which is a work in progress, a transition, both getting over problems of a war, the gradually reducing problem of grounded aircraft, and this re-assignment of capacity. I think an interesting point was they put a slide in showing uh booking threatens, how much late booking and how much uh early booking. So they were a bit more transparent than other carriers. We know this has been an issue of consumer hesitancy because of a war, but they seem to be indicating that as they published that things were maybe beginning to ease. Of course, we're talking now at the time we have this negotiation process going on from this uh peace memorandum between the US and Iran. So hopefully we're going to see more normal consumer behavior uh as we're rapidly approaching the summer peak.

SPEAKER_00 4:48

Yes, it sounded like the booking curve is normalizing. So more bookings are coming in earlier than was perhaps the case a couple of months ago, where people were particularly hesitant around booking, perhaps on the back of a lot of media coverage around fuel shortages, which didn't really materialize. During the earnings call, Wizair commented that for the second quarter, so that's the summer quarter for Wiz, that load factor is up or booked 4% above the same time last year, or that there's 4% load factor buffer compared to last year. So it does look like the booking curve is extending again back to where it uh previously was.

SPEAKER_01 5:25

Now let's uh let's hope for better things for Wiz in the months ahead. And let's turn our attentions now to the big news story of the last uh few weeks, uh, which is a possible bid for EasyJet. And uh, as we are talking, GAF, we've seen three approaches by the American investment firm Castle Lake to EasyJet bidding for the airline. All three at the point we're talking have been rejected. So this is very much a ball that is in play. But it's interesting, I think, to reflect whatever happens if that bid goes ahead or or not. What what is the reasoning behind this? What uh is Castle Lake seeing? It's uh it's as an airline, of course, very different to the investment that Castle Lake has had in SAS, which uh you know they're now going to reduce and ultimately get out of as uh SAS heads down the track, which we'll come to of consolidation with AirFunds KLM. But I guess I mean for me, you know, obviously they have a massive slot portfolio of air primary airports, a very large fleet and a big order book, many aircraft are unencumbered, and of course, um their market position and consumer recognition of a brand are all strong.

SPEAKER_00 6:34

From my perspective, it is a business which has a number of strong assets, as you say, the slot portfolio in airports like Gatwick or Luton or Geneva, Paris. I mean, there are a number of markets where they do hold slots in airports which are level three constrained, and they do have one of the world's strongest balance sheets in the industry, a net cap cash position, the highest credit rating in the world from SP along with Ryanair, more than 200 aircraft unencumbered. So there are a lot of assets that the business has built up over the decades, and I imagine that's what Castle Lake is seeing. And their thesis is probably that the market is undervaluing what those assets are are really worth.

SPEAKER_01 7:14

And that may well be the case in terms of so far, the management's reluctance to engage. They still believe even the bids that have come in have been undervaluing the business. So that one we may have to come back to in terms of the actual outcome. But even as it's going on live, of course, the the founder of EasyJet, Stelios Hadjian, who is still a minority shareholder. He's gone down from the large share he had, which from memory was around about 40%, I think, along with his brother and sister, down to about 15% now. I wonder, you know, how much rides on his view of this, because it seems to me it is his baby. You know, he created this airline, it's been the largest entrepreneurial thing he's done because he describes himself as a serial entrepreneur. It's fair to say he went for a phase when actually he was in some ways bored with growth in EasyJet. He just saw that as value destroying for shareholders. He wanted his dividends, but of course, there's been some uh pretty reasonable dividend payments coming through recently. And he has a brand license, so you know the name EasyJet and all that goes with it feeds uh Robot is too stelio. So I guess Castro certainly have to uh uh have him on side if a bid is going to go through.

SPEAKER_00 8:21

I believe he owns about 15% of the business, so it is a fairly chunky amount, and I'm sure he does have a strong vested interest in the continued success of the business given the potential dividends and the brand royalties that go with the EasyJet name. Castle Lake have still a few more days to convert, in the jargon, I believe, a possible offer to a firm offer. So I think we'll see after this third approach that uh they've made to the board, what comes out of that and whether something does get worked out that looks more attractive to the board or not.

SPEAKER_01 8:56

And the other question is, of course, as an American company, you know, EU regulation about ownership control doesn't permit a non-EU owner to have more than 49% of a business. And there's been a lot of speculation about partners, particularly other industry partners such as Air France, KLM and IEG. They, along with Lufthansa, see themselves as consolidators, but uh Ben Smith of Air France group, France KLM group, has said that they're not uh looking to engage on this topic. IEG, which it was really formed uh all about consolidation, has talked about the difficulty in the regulatory backdrop of doing so. So it seems to me we're not likely to see high-profile industry partners, and indeed there is this challenge in terms of uh the level of control that can be exercised.

SPEAKER_00 9:42

It looks like in the latest approach, uh Castle Lake has named a couple of European partners, so Peter Bellew, who was of course at Ryanair, EasyJet, Malaysian, Riadair, and Mark Breen from Arajet. So it does look like Castle Lake is trying to make a concerted effort to satisfy the European ownership elements, I believe, as well as enabling existing shareholders to participate in the future equity of a private business in some way. But certainly the ownership and control restrictions do make it difficult for an outsider beyond the EU to or beyond Europe to really hold control or hold a majority stake in a European airline.

SPEAKER_01 10:22

And just touching back briefly on Wiz, I mean, uh could WIS too be a target? I mean, it's seeing an incredibly low share price, it's been heavily short-sold recently, and maybe ironically, while it's struggling, as we said, to realign itself and restore historical levels of profitability, it too was mooted as being a bidder for EasyJet in recent years. It was never confirmed by any party who the bidder was at that time, but certainly industry logic was saying it was Wizaire. So now maybe the tape was a turn. But I guess some of the things we've said about the value, perceived value of EasyJet for Castle Lake are different with Wizair anyway, because they're not in primary airports, so very different fleet position and the problems they're wrestling with as well.

SPEAKER_00 11:06

Yes, I think Wiz's assets are different to EasyJet in a sense, because it's more focused, I would say, on having a very strong network footprint in Central and Eastern Europe, a strong fleet order, a very modern fleet. So I'd say Wiz's strengths are more around the business model, and EasyJet's um perhaps more around hard assets in a sense. I mean, I think Wiz has seen itself as a you know consolidator more from organic growth, I would say, predominantly over the last 20-something years than inorganically.

SPEAKER_01 11:33

And its own ambitions are weighed back. I mean, when it was mooted, they might move for EasyJet, Joseph Ferrardi had said publicly a number of times about wanting to grow at Gatwick, a bit of frustration about not being able to get so many slots, and certainly uh on the face of it, buying EasyJet then would have just changed that overnight, barring any give backs required in terms of remedies with EasyJet's Gatwick position. But uh that focus has changed. They are in Gatwick in a modest way, but as you said, focusing back in some ways on their heartland of uh Central and Eastern European network. Let's turn more widely to consolidation in Europe, and perhaps that there is just one after thought. Michael O'Leary's theory, of course, is that there will only be one independent low-cost airline left, which is his, of course, Ryanair. He's always argued that uh Wizair would likely go to say Lufthansa and Easyet would go to IEG. I mean, maybe he's flying more than a couple of kites there. Obviously, if there's more consolidation to come, because Europe as a whole, while I would say we've got what about six major sizable airlines, three big network groups, and the three low-cost, that's similar to the USA, but the percentages in terms of capacity held are much less. I mean, that the big six here, I think, accounting for around about sixty or so percent of total market capacity, whereas it's uh over 80 uh in the US. So certainly a long way to go.

SPEAKER_00 12:53

That's true. And within those big six groups, you do then also have a number of portfolio airlines. So the the market is significantly more fragmented than the US, even if the ownership does roll up into the same three large groups plus the three low-cost carriers.

SPEAKER_01 13:09

Absolutely. And I mentioned the three network groups do see themselves as consolidators. Of course, the big the first big uh consolidation piece in Europe was Air France, KLM merging. They haven't really been in a uh financially robust enough position until arguably more recently to do much consolidation. They consolidated with themselves. They have a number of co-chair partnerships in the big transatlantic joint venture, of course, with uh Delta, but they haven't gone out buying very much up till now. IEG was formed with that rationale in mind, starting with British Airways and uh Iberia, uh, adding other airlines, retaining their brands to that group. But they've taken a more lukewarm view on availing some of that consolidation recently. Lufthansa has also been a big consolidator, if a bit Germanically focused. In some ways, some of the key targets, you could say, have been taken. We've seen airling us go to uh IEG, we've seen the airlines around Germany go to Lufthansa with Swiss and Austria and a bit further afield with uh Brussels Airlines. So what is left in play? I mean, it seems to me we have TAP, we have SAS in terms of the big ones, and even that's partly uh clear what is going to happen.

SPEAKER_00 14:22

Yeah, in terms of the big network airlines, I think those are the the main two at this point. ITA, you know, recently absorbed into the Lufthansa group as well. So the direction of travel does certainly seem to be that the consolidation will continue. Those three big network groups will be the consolidators, while the individual airline brand names will probably persist. You know, it looks likely that especially on the network carrier side of the equation, most airlines will end up being part of one of those three groups.

SPEAKER_01 14:52

So if we look at the two that are around, SAS, uh it's not exactly a done deal, but it's on the way, and this year should become majority owned by Air France KLM. That one to me seemed like a master stroke. And I say that because many people think, well, what does it say about SAS, a smaller airline on the northern periphery of Europe? That is true, but I remember from my time at KLM, some of the richest markets at KLM were the Scandinavian markets in terms of potential and delivering feed uh into uh Amsterdam. So KLM has always been aware of the strength of that market, and I think it's probably not only a coincidence that uh Anko van der Veff, the CEO of uh SAS, is a Dutchman, ex uh KLM himself would be very aware of that fact. And I wonder if that deal would have happened had he not come in to be at the helm at that time, because it seemed to me they snatched it right from under Lufthansa's nose. Lufthansa had a uh code share, well, they hadn't even had a code share, but had a partnership, I think. They hadn't even used a code share. They certainly hadn't brought SAS into the joint venture, which they have across the Atlantic with United. So given the strength of that market, given problems at the hubs of the Air France KLM group, particularly uh Amsterdam with question marks and back capacity, it seems to me this is a very useful tool for them to get a wealthy market and to have somewhere to grow in the future in terms of an Northern hub up in uh Copenhagen.

SPEAKER_00 16:20

I think it is a good strategic fit for the Air France KLM group. As you say, it's a large market, maybe not huge in terms of population, but high average incomes, very high propensity to travel. I think it actually makes sense for both SAS and for Air France KLM, this partnership. And I think you can already see some of the strides made in terms of aligning the SAS product closer to what you see from Air France KLM. For many years, I think SAS had sort of flirted on the edges of what might be considered a low-cost model. But in the last couple of years, we've seen a lot more investment in the product, whether it's bringing on board Starlink or reintroducing the European business class, switching to forming a proper global hub in Copenhagen. It feels to me like that will be quite a strong third leg to the stool of um France KLM, I would say, in terms of the network flow alongside obviously Transavia on the low-cost side.

SPEAKER_01 17:15

Yeah, and I don't think it's going to draw too much regulatory heat. We'll talk about the regulatory aspect in a moment, but uh you know, that geographical distinction, and it's not really like this is eliminating uh competition, it seems to me. It's uh more about securing the future of SaaS, which its else has been through a turnaround. Effectively, it's been through uh the equivalent of chapter 11 and uh come out the other side, a much leaner, more efficient airline, as you said, really sharpening up both on its fleet and its uh product now, uh, which we hadn't seen for a long time. If we look at the other large airline that remains, is TAP, which of course has been privatized before and had the investment of the uh Brazilian consortium and under David Nealeman, and that all ended in tears with the government wanting to get back involved again. Then the government has subsequently decided they would like to have uh TAP privatized again, and now bids are in the process of going in. That one I would have put my money gaff on IAG going for. And then, in some ways, surprisingly, IAG's pulled back, citing you know the regulatory challenges of doing it, uh, you know, too much uh to potentially give back even bit before engaging. And just reflecting, digressing for a moment, in some ways I'm surprised that Lufthansa took a different view of ETA. They they invested in ETA and they had an enormous list of uh give backs, including slots of which, for example, uh ETEJet was a large beneficiary, but they took that pain to do ETA and they still talk up the value it will bring. How do you see things panning out with TAP GAF, especially considering that uh there's not going to be a bid from IAG?

SPEAKER_00 18:53

So I think TAP brings one very strong asset, which is its Brazilian footprint. It's by far the largest player in the Europe to Brazil market, and I think it would complement either Air France KLM or uh Lufthansa Group quite well. Air France KLM is already relatively strong over the Southern Atlantic, so Air France and KLM are both within the top five when it comes to airlines capacity between Europe and Latin America, and I think TAP would simply strengthen that and really bring the Brazilian market. For Lufthansa Group, it's slightly different. It's probably the weakest of the three large groups between Europe and Latin America. The highest Lufthansa group airline in the ranking between Europe and Latin America is Lufthansa itself, but it's down at number 11. So Latin America is a bit of a not quite a gap, but it's certainly a weaker element of the network relative to the other two large network groups in Europe. And I'm sure that's uh a hole that Lufthansa is looking to fill. So I think in both cases, there is a good strategic argument for TAP to form part of either group.

SPEAKER_01 19:59

Yeah, I mean it's just one thing, uh Garth, isn't it? But the other is just humans and culture. And if I look at Luftans, uh, you know, as I said, they've kind of gone for Germanic airlines, with the exception of ETA. ETA, and again, having had some involvement with uh Alitalia culture every time I was at uh KLM here in the UK, you know, the different national cultures between basically Latin and more reserved northern European uh can be challenging. I I think Lufthansa has its hands full to absorb ETA, and again, to have to go and do something with TAP, I would see is more challenging. Uh for instance, KLM and the the the style of uh operation there under Ben Smith seems more akin to making uh TAP work. Uh and another reflection, of course, Lufthansa has actually been centralizing remarkably a lot of commercial functions from its airlines. I mean, it seems to me they've uh almost made them uh zombie airlines apart from a product, which I find amazing with the likes of Swiss and Austria and so on now, network and revenue management being more centrally controlled. You know, Air France KLM's not in that position because it's just for two airlines at the moment, but um, and nor is IEG. There's a lot of uh brain power in each of their member airlines.

SPEAKER_00 21:15

Yes, it is certainly a different style. And Lufthansa Group, I think, is looking to get more synergy, especially on the commercial side, out of its various portfolio airlines. So it would be interesting to see what kind of an approach they would take with uh TAP if their bid were to be successful. I think one of Lufthansa Group's arguments was that because Lisbon as a hub is a bit more geographically separated and distinct from its existing heartland in Central Europe, it would be able to maintain more of a standalone hub in Lisbon than the Air France KLM group. That's Lufthansa Group's argument. But uh probably it would come with a lot more coordination between the airlines. Oh, absolutely.

SPEAKER_01 21:56

That's certainly one to watch in the coming months. I mean, I we mentioned already if you Times about the regulatory backdrop, and you know, IEG commented not only they would not make a bid for TAP, they talked about the difficulty for any bid for an airline like EasyJet, they're very aware of EasyJet and aware of many possible targets. But they walked away from another one which has now gone down a different track, which is Air Europa, because I I remember those discussions went on for so long. Of course, IEG still owns a stake in Air Europa. We have to see where they ultimately sell that. But that, in many ways, certainly took me by surprise when it went to Turkish Airlines. But just before touching on the specifics of that uh direction, I was amazed every time I saw both with the demands of the European Commission with Lufthansa and with IEG concerning Air Europa, I wasn't really surprised when IEG walked away because the give backs they had to offer, I think it amounted to more than half of Air Europa's slots they had to give back. Why the heck would you bother to do that if a regulator is demanding that much? And the very fact that Air Europa has gone to Turkish, great for them. They've added something they think is strategically important. But in terms of the EU's coherence, uh, we talk about uh growing European economies. I wonder if this is just a bit too tough, Garth. What's your feeling?

SPEAKER_00 23:16

Yeah, I would say the Turkish Airlines investment in Air Europa was also a surprise for me. That is still, again, subject to European approval. The money's gone into the business already as a convertible loan. If there is regulatory approval, that will convert into equity. So Turkish Airlines would own about a quarter of the business, alongside IAG on 20%, and alongside the founding family, we would still be the majority owner. The strategic fit is a little less clear-cut, I would say, when it comes to Air Europa's position within a Turkish Airlines portfolio. And the airline would be in the slightly awkward position, I think, of remaining a SkyTeam member at this point, while having an investor from OneWorld, an investor from Star Alliance. So the future direction, I would say, is a little less clear strategically than uh than the other two cases we've discussed with TAP and SAS.

SPEAKER_01 24:10

Yeah, I mean it's a surprising one. I mean, you know, Turkish Airlines itself is an amazing story with the unconstrained Istanbul, uh new international airport, the massive order book they have, their geography allowing them to use narrow-bodied aircraft to parts of uh, for example, Africa, which cannot be done by the Gulf Carriers and a beneficiary of the recent uh war, hopefully ended war with uh Iran and the USA. It maybe fills in a bit of a gap geographically, but it it doesn't seem to necessarily add a lot to uh you know the hub in Istanbul, nor does it make them a massive player in Madrid. Relatively speaking, that would have beefed up IEG's position in Madrid. My point that I feel strongly about culturally, the difference between Turkish culture and a Latin culture, again like uh that of Europa and Spain, I just think there will be enormous challenges, even if all the regulatory hurdles have met, there'll be enormous challenges to actually make that work day to day and differences in fleets as well. I mean there's some overlaps, but uh you know, quite a quite a challenging one to see how that plays out. It doesn't, to me, when we talk about synergies, we look at spreadsheets and efficiencies and uh market power, uh you still can't factor in these uncertain elements. And having been for a couple of mergers myself, where I saw that pain, I was at an airline early in my career, British Caledonia, but got but got bought by British Airways. I mean, it was a minnow relatively speaking compared to BA, but the cultural challenge to integrate that over time was uh phenomenal.

SPEAKER_00 25:42

Yes, I think it will be challenging. I mean, given that it's only a quarter of the business that they would own and IAG would still remain as an investor, it's not quite clear how the integration or how the synergy would work. The network as well, I think, is the synergies are not so obvious. Certainly Europa has a very strong Latin American network, but to what extent that could plug into supporting a hub in Istanbul is I think less clear, at least from my perspective. So, yes, I think still a lot of question marks with this one, I would say.

SPEAKER_01 26:15

And then just one over on the Turkish side, of course, we saw Pegasus buying smart wings and uh Czech airlines. That was interesting because it seemed to me they pitched it as they focused a lot on smart wings, which to me seemed to be an airline that's primarily a holiday operator tied in with uh tour operators as opposed to Czech being the Venn national airline. That looks like uh beefing up again the scale of Pegasus, which itself, of course, is already a large low-cost carrier. More force than that from you, Garth?

SPEAKER_00 26:46

I think there are a few potential benefits here. So one is that I mean Smart Wings does hold the number one market position in Prague, which is a reasonably sized market. They do also have operating certificates or AOCs in four countries across Central Europe, so Czech Republic, Hungary, Poland, and Slovakia. And given that the European and Turkish markets are, well, the market between Europe and Turkey is bilaterally constrained. There's no open skies agreement, there isn't even a pan-European agreement. It still relies on all the individual bilateral agreements between each country and Turkey. This would be a way, I think, for Pegasus to potentially gain more access to the market by being able to use more of the essentially the European side of those bilateral agreements, at least for those four countries. And, you know, potentially taking a very competitive cost structure from Pegasus and infusing that into the strong leisure portfolio that SmartWings has across those four countries. I think there are some potential synergies there. So again, this one is subject to regulatory approval, but an interesting one to watch.

SPEAKER_01 27:54

And just before we close, Gough, I just would like to tease out your thoughts again about the regulatory backdrop in Europe. I really feel the European Commission has been too tough. You know, we've had the draggy report on competition and much sort of nodding of heads about improving European competitiveness, but the airline industry would argue we need more consolidation. Think about the storms we're facing right now during and following this uh Iran war or pandemic or any other economic downturn or crisis of any kind. We need strong airline groups who can weather really tough down periods. And if the EU keeps coming out with massive give backs and concerns about competition, I sometimes wonder that if if competition isn't worried about, in certain cases, too much competition for competition's sake, and you keep failing weak airlines in existence longer, or newcomers come on the scene who aren't actually up to the task. They're not adequately set up, whether financially or in terms of management skill, or because of this mantra of competition.

SPEAKER_00 28:57

I mean, this was certainly the case for JetBlue and Spirit, where the Department of Justice took the view that this would negatively impact competition, but then fast forward two, three years later and Spirit's no longer in the market. And that has a much bigger impact probably on the competitive landscape. So I think there is a need to weigh both the short-term impacts of perhaps a bit more concentration in the market versus maintaining a healthy and economically viable industry in the long term. And certainly if you look at what's happened in the US over the last 20 years, where there has also been a lot of consolidation, those airlines are certainly in a much stronger and more resilient position than was perhaps the case in the 1990s or the early 2000s. I think it is important that we do have a healthy industry in Europe. So ensuring that these kind of deals can get done within the EU regulatory framework is important. I think the EU has quite a lot on its plate now in terms of looking at all these four, five, six deals that are happening right now, and everyone's looking to get these uh transactions completed by the end of 26. But um I also wonder whether there might be some resource constraint on the European side in terms of you know applying the scrutiny to all of these deals more or less at the same time.

SPEAKER_01 30:13

That's a good point. And um I think also the comparison you made with the US could be a lesson to the EU, not to be overly zealous in certain cases. I mean, as I mentioned, a Air Europa, great for Turkish, if they're going to get their hands on a part of that airline and add it to their global reach. But to me, my personal view is that IEG made the best fit, you know, with both culturally and in terms of uh what they have shown as their ability to run a group of quite diverse airlines, making them compete, but keeping their identities and delivering for consumers. Yeah, absolutely. Well, I think we're about out of time again for this edition, and there's lots more for us to come back to. Uh as we said, we have the EasyJet uh possible bid still in play as we record this. We prefer to have everything nicely wrapped up when we're talking, but uh that one's still pending, so we maybe have to come back to you, our dear listeners, with more on that as it evolves. Um consolidation space is ever-changing. So that's it for today's edition. We'll be back soon. Do give us your feedback. And for me, John Strickland, for now it's goodbye. And for me, Goslin, and I think.