The owner of British Airways, the European airline group IAG, has set its sights on acquiring Portuguese flag carrier TAP Air Portugal following its decision last week to abandon a controversial takeover of Air Europa due to regulatory hurdles.
Sources within the Madrid-based airline group claim IAG now sees TAP Air Portugal as a crucial way to expand its presence in Latin and South America—a long-sought goal that the Air Europa takeover was meant to address.
IAG decided to give up its attempt to acquire a 100% stake in Air Europe late last week due to the “current regulatory environment” – an acknowledgement that European antitrust regulators would block the deal because it would result in IAG having a stranglehold of the market in Madrid between flag carrier Iberia and Air Europa.
TAP Air Portugal could, however, be a much easier win for IAG, although the airline group will face competition from other European airlines, including the Air France-KLM group and potentially Germany’s Lufthansa.
The Lisbon-based carrier has a pretty troubled past and is currently fully owned by the Portuguese government after it hit financial difficulties at the start of the pandemic in 2020.
Before then, JetBlue founder David Neeleman had tried to revive TAP Air Portugal through the Atlantic Gateway Consortium, although Neeleman had already wanted out before the pandemic decimated TAP’s business model.
A potential sale of the airline had to be postponed last year following a financial scandal involving government ministers, although takeover talks are set to resume in the near future.
Due to TAP’s problematic financial situation and the urgent need to offload the airline from government control, European regulators are far more likely to approve a takeover deal without demanding deal-busting concessions.
Unlike its acquisition of Air Europa, IAG will face competition to snap up TAP, including from the Franco-Dutch Air France-KLM Group, which has previously expressed an interest in the airline.
Air France-KLM is, however, busy acquiring troubled Scandinavian airline SAS, while Lufthansa is dedicating a lot of resources to its majority takeover of Italian flag carrier ITA Airways.
