Summary
- IAG CEO Luis Gallego has expressed interest in the privatization of TAP Portugal, citing the airline’s route network to Brazil and Africa as a potential benefit to IAG.
- Gallego mentioned that IAG’s hub in Madrid could work in a complementary way with TAP’s hub in Lisbon, similar to how Dublin and London Heathrow work with their respective flag carriers.
- Other airlines, including Air France-KLM and Lufthansa Group, have also expressed interest in TAP Portugal due to its specialized South American route network.
The CEO of International Airlines Group (IAG) has indicated that the group remains interested in fellow European carrier TAP Air Portugal. The Portuguese flag carrier is in the process of privatization, with IAG among a group of parties that have previously expressed interest in the airline.
IAG expresses interest
The Chief Executive Officer of IAG, Luis Gallego, said at a conference on Wednesday it would be interested in the imminent privatization of the airline. Simple Flying previously revealed that the Portuguese government is looking to sell off a significant share of the carrier next month.
The airline group already has several key flag carriers in Europe, and TAP Air Portugal would enhance the group’s route offering. According to Reuters, Gallego indicated that interest would be dependent on the conditions required in the offer:
“We are always open to have great companies, brands in our portfolio. We want to see the conditions of TAP privatisation, we think it could be interesting for us.”
Photo: Bradley Caslin / Shutterstock
The country’s Infrastructure Minister previously gave several hints of what these could entail. Critical issues that could influence the Government’s decision in the deal include the bidder’s growth plans for the company, keeping the hub in Lisbon, and protecting the brand.
How would it help IAG?
From its hub at Lisbon Airport, the airline has an extensive network in the Americas. The carrier carried one million passengers on routes to Brazil alone in July. The airline flies to eleven destinations in the country. It is also strong in North America, with 91 weekly flights scheduled in 2014.
IAG’s Gallego indicated that the carrier network to Brazil and former Portuguese colonies in Africa could be a good addition. IAG currently has a nearby hub with Iberia in Madrid. Gellego suggested it would operate in much the same way as complementary hubs in Dublin and London Heathrow do with their respective flag carriers. The CEO also mentioned that demand is growing faster in Madrid than in London and that corporate travel was the holdout:
“Demand is very strong, particularly leisure demand. Premium leisure traffic is amazing. The corporate traffic is the one that is lagging behind.”
Photo: odecam / Shutterstock
Other carriers to express interest are Air France-KLM and the Lufthansa Group. Both airlines offer a similar hub and spoke approach and lack TAP’s specialized South American route network.
At the same event, TAP CEO Luis Rodrigues told reporters he expected Thursday to be a big day for the company, which has seen a solid return to profitability.