Lufthansa's chief executive has this to say about M&A

Hayley Kirton
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Lufthansa Braces For 24-Hour Strike
Prepare for M&A takeoff? Not in this regulatory climate, warns Lufthansa boss (Source: Getty)

A protectionist attitude is putting the brakes on cross-boarder M&A activity in the airline industry, Lufthansa's chief executive has warned.

Speaking at an event in Zurich today, Carsten Spohr added that he only saw regulators shifting towards more protectionism, not less.

"To be honest I see protectionism around the world rising rather than more liberalisation," Reuters quoted Spohr as saying.

He added: "In our industry there's so many limitations and regulations on what you can do outside your legal spectrum."

Read more: Goldman Sachs is feeling pretty confident about M&A this year

Spohr added that the issue, which is exasperated by some countries having various restrictions in the foreign ownership of airline companies, was discussed at this week's International Air Transport Association meeting in Dublin.

"We all met there, there were plenty of talks," said Spohr. "We all look at each other and believe there are too many limitations. All you can do right now is a financial minority investment."

Lufthansa had not replied to City A.M.'s request for comment at time of writing.

The airline industry isn't the only one in which deals have come undone because of red tape. For example, the European Commission blocked Three-O2 last month, on the grounds that the £10.25bn deal would result in an uncompetitive market for consumers.

Read more: Why buyers are taking a "watch and wait" approach to UK-targeted M&A

Meanwhile, Anheuser-Busch InBev and SABMiller have had to jump through several regulatory hoops to make sure their megabrew deal doesn't fizzle out, including agreeing to sell popular SABMiller brands Peroni and Grolsch to Asahi.

The EU anti-trust watchdog finally raised a glass to the deal last month.

Moving on to a different jurisdiction, the US' recent tightening of its anti-inversion laws, which seek to prevent companies shifting their tax residence to a country with a lower rate after a merger, has thrown a number of other deals into doubt.

The rule change was partly behind the deal between US Pfizer and Irish Allergan, which was worth £113bn and would have been the biggest pharmaceuticals deal in history, falling through.