The imminent opening of a sale process for the Portuguese airline TAP has not changed the priority objective of the holding company IAG to reinforce Iberia with the sum of Air Europe. However, the company led by Luis Gallego is closely monitoring the budding operation in Lisbon. It would be an alternative plan if Brussels again has great reluctance to buy the company from the Hidalgo family.
the american evercore prepares the TAP sales book while the Portuguese government has already tested the appetite of the main air groups. IAG has been courted, even with various public statements about the fit of an integration of TAP with Iberia. But the Minister of Economy, Antonio Costa Silva, changed the pace on Thursday by stating before Parliament that the Spanish does not seem “a good solution” for a marriage. Behind this cooling, which does not amount to closing doors, would be the closeness of the hubs from Lisbon and Madrid. Costa, yes, acknowledged having declared last January that TAP had “created the conditions for Iberia to enter into its privatization”, adding that it is his responsibility to “attract the greatest number of interested parties for our airline”.
Despite everything, IAG is awaiting the conclusion of the negotiations with Globalia for Air Europa, a movement about which there is still optimism in Iberia, and it has shown itself to measure forces in other processes. the nordic SAS and Finnair They are other candidates to go out to the showcase.
“The Portuguese company has a large part of its long-haul market in Brazil, where it prevails over the rest of the European airlines”, explains an air market analyst, “it would not be strange if a potential owner like air France strengthen TAP’s routes to the rest of Latin America”.
A fight between Air France, Lufthansa and IAG is expected in the market
The consolidation process in the European aviation sector forces the reinforcement of IAG in the Madrid-Barajas position. And it is that the Rome-Fiumicino airport also aims to become a serious threat.
The group lufthansa negotiates with the Italian Government the entry into ITA, successor to Alitalia, with a maximum initial package of 40%. From there it would rise to 51% as soon as the Italian company overcomes the losses, and would become the sole shareholder in 2027. “The German company will dominate the Italian market and could boost the offer in Rome to and from Latin America, a market in which it plays a minor role from the center of Europe ”, explains one of the sources consulted.
With Lufthansa operating out of Rome and a possible new life for TAP once it is turned over to private equity, Iberia would feel the current push from Air France from Paris, and that of the potential new shareholders of ITA and TAP. The situation seems to have permeated the Spanish government, which has become aware of the importance of Spanish integration in Madrid-Barajas.
Latin America at stake
The discourse already internalized in La Moncloa is that Aena’s largest airport must face Asia, for which a more powerful airline than the current Iberia is necessary. But what worries now, above all, is that Madrid does not give up its role as the gateway to Europe to and from Latin America.
The Portuguese Government will soon take the operation to the Council of Ministers
The Portuguese Government will shortly bring the sale of 100% of the rescued TAP to the Council of Ministers. And the aforementioned Air France and Lufthansa sound like candidates to bid. The first was about to buy Air Europa and could return to the charge. As for Lufthansa, it is more interested in disembarking in Italy, as is the case with IAG and its attempt to buy Air Europa.
March is going to be a decisive month for the battle for which it once again became a Portuguese flag company. It is expected that TAP will show a recovery well above what its restructuring plan establishes (it presented a net profit of 111 million in the third quarter, which reduced the losses in the nine months to 91 million), and that this milestone can generate interest. Its refloating with public money reached 3,200 million, which the Executive seeks to recover with the placement of all the capital.
Resuscitation after rescue
sacrifices. The European Commission gave the green light to the rescue of TAP Air in December 2021. The aid came in exchange for a fleet reduction (it had 106 aircraft before the health crisis and dropped to 96) and a workforce adjustment that reached 2,900 troops . Those who stayed with the company suffered a 25% pay cut.
Key to Lisbon. The TAP Air squadron has 96 aircraft: 22 long-haul (19 A330neo and three A330ceo); 54 short and medium-haul aircraft (A319, A320 and A321), and 20 aircraft for regional routes (ATR and Embraer) operated by the subsidiary Portugalia. Its market share at Lisbon airport exceeds 50%.
Post-crisis reserve. The airline presented a cash position as of September 30 of 775 million, which represents a reduction of 115 million compared to June due to the increase in activity during the summer months. The liquidity buffer doubles that of September 2021 (377 million).
Recovery. TAP’s load factor was slightly above that presented in the same period of 2019 last summer. That year prior to the pandemic, the airline served 17 million travelers.
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