When International Airlines Group (IAG) CEO Willie Walsh publicly discusses the future of his company, he usually talks about who IAG might buy next. TAP Portugal has been mentioned as an addition to the group that could bolster its already impressive presence in the Europe-Latin America market. But with the near collapse of Spanish Bankia bank, another question is raised: Who might buy a stake in IAG?
Bankia owns 12% of the airline group comprising of British Airways and Iberia. It plans to dispose of large shareholdings to improve its financial situation and limit the size of the government bailout needed. It will be difficult to find investors at this point.
While BA is still doing okay, Iberia is in deep trouble and still needs to prove it has found a sustainable for model for its European operation. It is too early to tell whether Iberia Express is the right answer and IAG results will be dragged down by its subsidiary for a significant time. And if short-haul does not work, Iberia’s main asset, its Latin American network is threatened, too.
An investor would have to have a strategic interest in the business. One might think of Lufthansa as an option to promote further consolidation in the sector, although it would be a tough sell from a regulatory perspective and the airline has its hands full trying to achieve its own turn-around. Another option would be Etihad or Qatar Airways, both of which have been active buyers of European airline stakes – Air Berlin, Cargolux and Aer Lingus .
Hard to believe? Yes, but if you are going to buy into European carriers, this is the first opportunity to get into one of the three big groups. They will certainly take a look, provided Bankia can freely chose a buyer.