Just a few days ago, I posted about IAG’s interest in acquiring Royal Jordanian. Today, IAG again is making headlines about it’s appetite for acquisition. This time the cross-hairs have shifted to Portugal’s (and Star Alliance’s)TAP.
IAG’s interest lies in the Lisbon Hub and deeper access into Africa and South America, both seen as major sources of future growth.
Under the terms in which Portugal received Euro 78 billion in bailout funds sponsored by the EU and IMF, the Portuguese government committed to privatizing nationally held assets. TAP is part of Portugal’s national portfolio of companies which include utility companies and other holdings.
According to TAP, there have been other unofficial indications of interest, but IAG has been the only “official” party to show interest. TAP also said that a deal to sell all or part of the airline can happen as early as this year.
IAG of course owes it to it’s shareholders and other stake holders to continuously explore options and opportunities to increase it’s return on equity. Being a bigger airline generally means certain operating efficiencies that allow it to outperform small competitors and to weather poor operating environments successfully.
It’s my opinion that IAG sees a shadow slowly being cast over the global airline industry by a certain Dubai based airline who clearly stated it’s intent was to have it’s aircraft (Yes, all the A380’s that it can get from Airbus) cover the globe. By building it’s portfolio of airlines will only help it defend itself against their competition. Certainly this is only one of several potential reasons that IAG has as it tries to grow by addition.
Whenever IAG sees an opportunity to strengthen it’s timetable and expand it’s reach, it is going to take advantage. You really can’t blame them. When small carriers are struggling to survive, it’s easy for large carriers to find great deals among them. A perfect example was it’s recent acquisition of BMI from Lufthansa. That gambit essentially blocks Star Alliance and Skyteam from having any serious presence in the UK, specifically the global gateway that British Airways has in London’s Heathrow airport.
I’m sure I’ll be back in a few days with a post on IAG’s next target. After all, Finnair and LOT among others are looking for help.
TAP is an interesting target.
IAG has always been looking to acquiring TAP. And while the focus on business has been in between Europe and Asia, IAG realizes that it’s already pretty late in the game and it’s not in the best geographical location to position itself to become a Europe-Asia premier carrier (versus Finnair, with its HEL located perfectly in between; a lot of business has also gone to carriers like EK/EY/QR, hence IAG’s interest in RJ). IAG is hoping to acquire TAP so it secures its presence in Europe-South America earlier, also securing oneworld’s stronghold in South America (practically it’s only stronghold left).
If IAG really has their way with TAP, it would really shake up aviation alliances. Oneworld has always been lacking in terms of number of carriers and has been loosing strength in Europe and Asia, and TAPs acquisition could be a monumental shift, especially with its current dominance and positioning between Europe and South America.