I really don’t see the logic of buying an airline outside Europe. Aviation ownership rules and treaties make this a problematic issue and until this whole question is resolved at a government level, I don’t think IAG will risk that. It is an oddity of the airline industry that cross border ownership is so rare unlike other industries.
Within Europe, others have correctly pointed out that competition concerns would prevent acquisitions of the likes of LH, AF & KL. With the US now consolidated into 3 global carriers and EU into 3 global holding groups, anti-trust rules will be very stringent.
I can see further consolidation in the LCC area so a merger of Vueling with a smaller LCC could happen.
But I come back to my tip of Finnair. I think this ticks so many boxes strategically for IAG that I am sure they will be looking at them with interest. I don’t see any of the East European airlines as suitable candidates as none of them have developed an Asian route network unlike Finnair.