IAG boss says it can offer a better deal for TAP

Airline conglomerate IAG believes its offer for TAP is more attractive than that of Lufthansa and Air France-KLM.

According to an interview by EL Pais with Luís Gallego, CEO of IAG (British Airways and Iberia) on the Portuguese government’s intention to sell only 44.9% of TAP, IAG will “request a detailed breakdown of the conditions of sale” and then decide if it is “a good option or not”.

The CEO had already signalled that the group’s acquisitions model had always been to hold a 100% share of the capital of the companies it acquires.

However, Luís Gallego said that regarding TAP “we’ll see if this initial privatisation phase will maintain.”

Asked about the valuation of TAP – currently at around €700 million -, Luís Galego pointed out that this was the Portuguese government’s estimate, but that IAG would have to make its own valuation.

Luís Galego told El Pais that he was not worried about the possibility of the European Commission imposing conditions on IAG if it should end up being selected as the winning candidate, because of the routes that TAP has from Lisbon and Porto and also to the Brazilian market, Luús Gallego said he saw the Lisbon and Porto hubs as wholly separate from Madrid, making IAG as the “option with the least overexposure” compared to Air France-KLM and Lufthansa.

The IAG CEO adds that should IAG be the eventual buyer, TAP could be confident that it it would project it and make it more successful because of its know-how and financial performance.

“Remember that we are investing more than €7Bn billion in British Airways and €6Bn in Iberia. TAP is attractive due to its access to the Brazilian market, with a 25% share of traffic between Europe and Brazil. IAG does not have a strong presence there and although we could develop an organic plan for Brazil, TAP would allow us to accelerate.

Our intention would be to develop its presence in each location where it operates and to seek new markets for TAP.

As for airports, Lisbon offers an attractive position in the North Atlantic and towards Africa and Europe, as well as serving the short-and medium-haul traffic that feeds the hub. Porto also promises opportunities,” said Luis Gallego.

Luis Gallego also admitted that IAG has an excess of cash that it could invest in operations such as TAP.