Five year-old Vueling, the Spanish low fare airline, will formally combine with its rival clickair on the 9th of July to create what the new Vueling CEO Alex Cruz calls ‘a merger of equals.’   On Monday 29th June the Spanish stock market regulator CNMW exempted Iberia from making a takeover bid for the new airline but Iberia will hold a 45.85% shareholding in the new Vueling.

When the union is formally registered next week the 36-month old clickair brand will disappear and Vueling will have Spanish flag carrier Iberia, still a competitor in some routes, as a key shareholder.  The new airline will be the second Spanish airline and a sizeable player in the LCC market, flying 11 million passengers a year from six key bases in Spain including its Barcelona Airport HQ.  The new Vueling will encompass a route network of almost 50 destinations. 

Alongside the Iberia shareholding in the new Vueling are Hemisferio/Planeta with 14.3%; Nefinsa, owner of regional Spanish airline Air Nostrum, and a current clickair partner, 4.15%.  A number of small shareholders will have nearly 5% with the remainder of the shares will be traded on the Spanish stock market under Vueling’s current listing (VLG; Reuters: VLG.MC, Bloomberg: VLG SM).

The new Vueling (IATA code VY) will operate 35 Airbus A320s (18 aircraft coming from clickair and 17 from Vueling).  It will serve a total of 46 airports (all main hub airports and terminals) embracing a total of 92 routes.   clickair and Vueling have an overlap of 17 routes, equivalent to 21% of ASK’s, but this overlapping capacity will be used to strengthen weaker routes and launch new, viable ones, said Alex Cruz.  He highlighted: “The new Vueling must deliver a three year plan to the Board in October and ‘a zero growth plan is unlikely to be acceptable.”

Vueling to be new name in the UK

Vueling will be a new name to the UK and London Heathrow Airport from mid July, absorbing clickair’s daily flights to Seville, La Coruna, Bilbao, in addition to its summer flights to Vigo, returning for the summer since 1 June and now from LHR where the new Vueling will focus its UK operations.  It will also retain current clickair flights to North Africa (Casablanca and Marrakech) and into Eastern Europe including Moscow, St. Petersburg, Warsaw, Budapest and Bucharest. Italy will continue to be Vueling’s second biggest market after Spain for the new company.  Madrid will feature prominently on the new Vueling’s network as one of its six key Spanish bases.  The others are Barcelona, Seville, Bilbao, Malaga and Valencia. The new Vueling will cater for 70% leisure/30% business travellers, said Cruz.

Effective 7th July, clickair’s personnel will move to Vueling’s offices at El Prat Airport, just 1km away.  The total combined workforce will number a 1,300, including flight crew and office staff.

Background to merger

clickair and Vueling signed a Memorandum of Understanding in summer 2008 to operate under the Vueling brand and remain headquartered in Barcelona having agreed to join forces earlier last year to better tackle competition in the Spanish and ‘Euro-Mediterranean’ markets.

Current operations

Vueling: Operates a fleet of 17 aircraft on 45 routes centred around three bases. Its market share in Barcelona is 12.2%. 

clickair: Operates 18 aircraft and 48 routes centred around five bases.  Its market share in Barcelona is 14.4%.

The new Vueling – a European-wide ‘new generation’ low fares airline

Will serve 18 countries, including the UK (remaining the only true low fares airline at London Heathrow Airport).  It will serve 46 airports from six key bases and operate a total of 92 routes.  The merger will create a more attractive product for the customer.

The company will generate revenues of some Euros €800 million per annum.  The breakdown is expected as follows: Vueling.com = 45%; Iberia codeshare 25%; Vueling’s own GDS 15%; Online travel agents 10% and other channels 10%.

Synergies

In the initial budget the synergies resulting from this merger should generate between €40 million and €45 million in a normal year.  Over three years the cost synergies will be up to €75 million.

Source: Vueling Airlines