The parent company of Iberia and Vueling, IAG, is willing to bid for the Portuguese airline IAG, like other companies interested in the bid, it is waiting for the conditions established by the Portuguese Government for the privatization of the firm.
The privatization of the Portuguese company is going to start now and “we are going to see what the Portuguese government considers in this process and to analyze if it is interesting for IAG”, its CEO, Luis Gallego, who participates, has indicated in statements to EFE these days at the 79th general assembly of the International Air Transport Association (IATA), he stressed that IAG is always looking for consolidation opportunities and some have been done and others have not.
In turn, he has recorded that, for example, he thought about the purchase of Norwegian, but never made it effective, while he continues to try to buy Air Europa and, depending on the level of ‘remedies’ (assignments) that the Directorate General of the competence of the European Commission (EC) to impose on this operation, you will see if it makes sense to go ahead or not. According to Gallego, “TAP may be an option, but first we have to see under what conditions it is going to be privatized and if it makes sense for our network and for our clients.”
With two complementary markets
The executive explained that, in principle, the markets in which Air Europa and TAP operate are complementary, as the latter flies above all to Brazil, where his group does not have much presence, with which “it could be two operations that advance in parallel”.
Regarding the proximity between Lisbon airport and Madrid-Barajas airport, he commented that IAG, being an international group with several airlines (Iberia, British Airways -BA-, Vueling, Aer Lingus, Iberia Express and Level) works, for example, in the North Atlantic, with a double ‘hub’ structure: Dublin and London.
This type of emergency also arose with the Aer Lingus purchase operation, he acknowledged, in which case he questioned “whether its integration into IAG was going to be bad for the Irish company because BA could, in some way, eat it, and it has not been so”. Aer Lingus has developed a lot since then, with which IAG has shown that all the companies that are integrated into it, develop, it has affirmed.
In his opinion, the IAG model is the best, since it is less integrated at a commercial and network level, and the brands maintain their identity, their clients and their income statements. “We are a unique model”, which does not have such a degree of overlap between the different brands of the group, he has highlighted.
In his opinion, when the conditions for the privatization process of TAP are made public, the three large European network groups – in addition to IAG, Air France-KLM and Lufthansa – “we will at least see if we are interested”.
IAG has always defended that it is a consolidation platform and “we believe that consolidating the market is good, as it was consolidated in the United States, and that this has to be the way of Europe, because, in the end, it is an advantage for customers or for crises like the one we have had during the covid”, he pointed out. In addition, he pointed out that “there is going to be a consolidation, it is clear, and each one of us is seeing similar pieces that can contribute the most to our model of business,” he said.
The airlines are coming out of the crisis
Regarding Air Europa, IAG has had the first interactions with the EC and, after presenting the information, is waiting for your questions about the operation. IAG has a proactive approach on the routes where it considers there may be more competition problems, but Gallego has not revealed if it is similar to the one he presented in his first attempt to obtain EC approval for the operation, in the middle of the covid , and that I retire at the end of 2021.
“We are reviewing with the EC what can make sense” because, the context in which the agreements with Volotea and World2Fly were presented as the possible solution, is now different. The airlines are coming out of the crisis and demand is high, compared to a context at that time in which many companies could disappear, although it is also true that now it is time to repay the debt generated during the covid, so “it is another approach, but the problem is the same,” he said.
Doubts about the last quarter
Regarding the prospects for this year, he said that it is not known if the real growth of traffic is going to be maintained over time or not. The second and third quarters “look good”, but the last one, it is not known, since the traffic is still below the level of 2019 and, in addition, there are MANY uncertainties such as the war in Ukraine or the price of fuel , among other.
Added to this is the aforementioned debt and, although demand is strong at the moment, it will drop at some point, so companies “have to be more efficient from a cost point of view,” he concluded.