IAG, the parent group of Iberia, is weighing a bid for TAP, the Portuguese carrier, alongside other contenders. This consideration runs in parallel with Air Europa’s acquisition process, which awaits clearance from European competition authorities. The privatization terms set by the Portuguese government must be reasonable for the group to consider any deal.
“We will wait for the Portuguese government to decide in this process and evaluate whether it aligns with IAG’s interests,” said CEO Luis Gallego, speaking to EFE. This stance mirrors a broader mindset at IAG, where consolidation opportunities are continually evaluated and where some moves materialize while others do not.
Speaking at the 79th general assembly of the International Air Transport Association, Gallego reaffirmed that IAG remains open to consolidation opportunities when they fit the network and customer needs. He recalled past experiences, noting that a discussed purchase by Norway did not materialize, while Air Europa continues on its path and faces the European Commission’s DG Competition review, with remedies depending on concessions demanded in the operation.
Gallego stated that TAP could be an option, but only if the terms are right and aligned with the group’s network strategy and customer benefits.
Two markets that complement each other
The manager emphasized that the markets where Air Europa and TAP operate complement each other. There could even be two parallel operations, especially on routes to Brazil where the group has limited presence.
He highlighted the proximity between Lisbon Airport and Madrid-Barajas and described IAG as an international group with multiple airlines, including Iberia, British Airways, Vueling, Aer Lingus, Iberia Express, and Level. The Northern Atlantic routes to Dublin and London illustrate the network’s breadth.
This kind of question about integration also arose during the Aer Lingus discussions. He acknowledged the concern but argued that integration should not erode the Irish company’s identity or competitiveness, given the potential for synergies under a broader group structure.
Aer Lingus has shown notable progress since joining IAG, and improvements have been reflected in the performance of the broader family of brands within the group.
Gallego argued that IAG’s model preserves brand identities, protects customer relationships, and stabilizes financial performance by avoiding excessive operational overlap among the group’s brands. He stressed that IAG operates a distinctive, lightly integrated model that maintains individual brand strengths while enabling coordinated network benefits.
He noted that once the terms of TAP’s privatization are published, the three major European network groups besides IAG—Air France-KLM and Lufthansa—will assess whether there is any interest.
IAG has consistently positioned itself as a platform for consolidation and has suggested that market consolidation can benefit customers in Europe, much as it does in the United States. This view is framed as a path to resilience during economic downturns and a way to manage crises that disrupt air travel, such as the Covid-19 pandemic.
“It’s clear what consolidation can achieve, and each company is examining the elements that can contribute most to its business model,” he explained.
First interactions with Europe
On Air Europa, IAG has initiated initial contacts with the European Commission and is awaiting questions about the operation after submitting information.
IAG is taking a proactive stance on routes where competition concerns may be stronger, though Gallego did not disclose whether the approach mirrors what was presented during the first attempt to obtain approval amid the pandemic. The earlier effort’s program ended in 2021.
He mentioned ongoing reviews with AK as potential paths forward, noting that the landscape for Volotea and World2Fly presents different scenarios now than in the past.
Airlines are emerging from the crisis with robust demand, even as some fleets or services may shrink. The repayment of Covid-era debt remains a factor, so a prudent approach to cost efficiency is essential.
Last quarter doubts
Looking ahead, the path for traffic growth and the durability of any gains remain uncertain. The second and third quarters appear promising, but the final quarter is less certain. Corporate travel remains below 2019 levels, and several uncertainties persist, including geopolitical tensions and fluctuating fuel prices.
Debt levels add another layer of caution, and even with strong current demand, better cost control will be needed as the market adjusts over time.