International Airlines Group, which owns British Airways and Iberia, has terminated its agreement to buy Air Europa, a Spanish carrier, from its parent company, Globalia. IAG cited the “current regulatory environment” as the reason. IAG already holds a 20% minority interest in Air Europa.

According to recent news reports, the European Commission was preparing to reject the deal on competitive grounds, despite IAG having taken several actions to reduce concerns. Luis Gallego, CEO, said, “We believe this decision is in the best interests of our shareholders,” adding, “IAG remains committed to its strategy, including competing effectively from its Madrid hub.”

IAG had already halted one bid for Air Europa in late 2021, in part because of competitive concerns. It made another move for ownership of the carrier in 2023 under a restructured deal.

The company also released its second quarter earnings, saying it had achieved an operating profit of $1.34 billion, which was down slightly from the record $1.35 billion it reported in the same period of 2023.

IAG reported “strong demand for travel” for the rest of 2024, particularly in its core markets of the North Atlantic, Latin America and intra-Europe.