The ￡420 million takeover of Air Europa by British Airways owner IAG has been scrapped, both sides have announced.

       They said “discussions are at an advanced stage to terminate the agreement” and it comes just weeks after the UK’s competition watchdog said it would investigate whether it breached competition rules.

       IAG first announced plans to buy the Spanish airline in 2019 for one billion euros (￡840 million) although the price was slashed after the Covid-19 pandemic knocked the entire sector by grounding planes.

       It has now been scrapped entirely.

       Bosses had already offered concessions to EU antitrust bodies over the deal, although the details have not been made public.

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       A European Commission investigation was launched in June over concerns that the plans would reduce competition on Spanish domestic routes and international routes to and from the country.

       IAG already owns Iberia and the deal would see it buying Air Europa on behalf of IAG, but trade unions and rival carriers had raised concerns.