IAG purchase could create meg-hub in the South of Europe says CEO
Luis Gallego, CEO of the International Airlines Group (IAG), has revealed that the purchase of TAP Air Portugal would be a strategic move to consolidate a dual hub in southern Europe, integrating Lisbon and Madrid. This would allow IAG to compete directly with northern giants such as Paris, Amsterdam and Frankfurt, dominated by alliances such as Air France KLM and Lufthansa.
As Hosteltur reports, despite the optimism, Gallego emphasised that everything will depend on the conditions imposed by the Portuguese government in the sale process.
During his speech at the La Caixa Foundation, Gallego highlighted that TAP is seen as complementary to IAG’s current business, mainly because it provides robust access to the Brazilian market, where Iberia, one of the group’s components, has little expression.
The potential of creating a southern European hub is to strengthen its position against the established northern air hubs.
However, Gallego made it clear that there is no rush to acquire TAP on its own, reaffirming that the group is “careful” when choosing companies to incorporate, noting that they must operate within operating profit margins similar to IAG, which currently range between 12% and 15%.
Commenting on Air Europa, of which IAG owns 20% due to a previous unsuccessful takeover attempt, Gallego mentioned that the company is likely to undergo a capital expansion. However, IAG has not yet decided whether it will participate in this process.
The executive also highlighted that IAG plans to invest €6 billion over the next five years in fleet and service renewal, strengthening its presence in the South and North Atlantic markets, with a special focus on Iberia and non-capital-intensive businesses, such as customer loyalty programmes through IAG Loyalty. It also seeks to strengthen existing strategic partnerships, such as with American Airlines and Qatar Airways, to expand the global network of destinations