International Airlines Group (IAG), the parent of British Airways (BA) and Iberia, is set to bid for TAP Portugal as it seeks to expand its international presence, although a potential rival could also enter negotiations in the form of Brazilian carrier TAM. IAG has stated publicly that it is looking at 12 potential takeover targets following the merger of BA and Iberia, but reports in a respected UK newspaper highlighted the Portuguese carrier as a likely target after it emerged that Portugal’s government is set to sell TAP as a condition of its €78 billion (£69 billion) bail-out by the European Union and International Monetary Fund. It is now also claimed by trusted sources that TAM is in discussions with the Brazilian government about finance for a potential acquisition.
TAP currently operates almost 2,000 weekly flights to more than 70 destinations across Portugal, Europe, to South America and more recently Africa. It is currently the second largest carrier between Europe and South America, carrying a 14.9 per cent share of the estimated 10.4 million O&D passengers that travelled between the two continents. Iberia is the largest airline in this market and if you combined both IAG partners with TAP’s traffic it would give the combined carriers a 37.8 per cent share of the traffic.
TAM’s proposal may be a defensive strategy from the Star Alliance to protect its interests in the European, South American and Africa markets, where TAP currently has a growing presence. Both are full members of the global airline grouping, while IAG’s subsidiaries are part of rival oneworld.
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