[transtraxman]

Seeing this news piece brought to mind the processes being put into action and those that will come into the headlines in the near future.
*****”IAG mum on TAP privatisation being its “Plan B”,” (17-2-23, ch-aviation)

https://www.ch-aviation.com/portal/news/124652-iag-mum-on-tap-privatisation-being-its-plan-b

This appeared after this other hit the headlines the just before it…..
*****”Air France-KLM Is Interested In Buying TAP Air Portugal,” (17-2-23, Simple Flying)

https://simpleflying.com/air-france-klm-tap-air-portugal-interest/

To put things into perspective it should be pointed out that Air France has had a long term interest in buying Air Europa with its plethora of routes into South America. IAG wants to checkmate that interest by offering to buy Air Europa and so make Madrid Barajas the main gateway to Latin America. all under the Iberia flag. If IAG is not successful in its bid for Air Europa then Air France will be free to change its bid from TAP back to Air Europa. The likely outcome is for IAG to take over Air Europa, but be prohibited from taking over TAP, which will go to AF/KLM.

How does the Lufthansa group figure in all this. At the moment it is embroiled in an attempt to take over the new national Italian carrier — ITA. Here it is likely to be successful.
As a Result of that one can easily see that anyone interested in buying TAP would be put under the microscope by the competition authorities.
If Iberia is given the go-ahead to buy Air Europa then the most likely outcome would be for Iberia to be prohibited from buying TAP. On the other hand, if Iberia is prohibited from buying Air Europa then it will be free to bid for TAP.
On the other hand the Lufthansa group is not lying idle. Its subsidiary, Eurowings, has started to coddle up to Volotea. The presence of LH´s Eurowings subsidiary in ever widening markets in Europe makes it appear to be an ever increasing aggressive operator.Its chosen partner, Volotea, is a spin-off from Vueling. It is well run and opens latin markets in Europe,(Spain, Italy and France).
*****”Germany’s Eurowings, Spain’s Volotea sign sales partnership,” (17-2-23, ch-aviation)

https://www.ch-aviation.com/portal/news/124568-germanys-eurowings-spains-volotea-sign-sales-partnership

This move throws the gauntlet down to both IAG (with its Vueling subsidiary) and AF/KLM (with their Transavia subsidiaries) What will they do after this is done? They have to expand to be meaningful in the low cost market. What is their future, to merge with JET2, Condor, TUI or one of the other LCCs or Charter Airlines? Ryanair seems big enough to survive but what will happen to Easyjet and Wizzair? Are they to be prey or predators?

Of the remaining full service airlines there seems to be three or four that are not already in their likely predetermined destinations. Finnair is in ONEWORLD and seems likely to end up in IAG. Both SAS and LOT are in Star Alliance, but I cannot see them both being taken over by Lufthansa. One,yes, but both, no. The other remaining medium sized airline is the czech, charter, regular service SMARTWINGS, https://www.smartwings.com/es/sobre-smartwings, together with CSA Czech Airlines, which initially lies within the Skyteam alliance.

All this means that everybody is on the block and up for grabs. Anything can happen from now on.

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LuganoPirate, fatbear, pdwtrip, sparkyflier

[cybertravller]

Would there not be a competition issue if IAG had both Iberia and Air Europa? It sounds like a monopoly to Latin America from Madrid

[transtraxman]

Iberia already forms part of the IAG group. Its interest towards Air Europa goes back to 2019 when IAG bid €1000 million for the group but was immediately considered too much with the oncoming coronavid19 epidemic. Thus it was reduced to €500 million. It would most likely have been accepted in order to keep Air France/KLM out of Barajas airport but was scuppered by the epidemic. As a result the original conditions were renegotiated to permit IAG to buy Air Europa for €500 miiion. IAG took advantage of that to take a slice of 20 per cent of Air Europa instead of the payback of a loan of €100 miilion previously made to Air Europa. So I see no competition problem in IAG taking over the holiday group.

TAP runs many flights from Portugal to Brazil and the rest of South America. Incorporating that airline into IAG, as well as Air Europa, would provoke serious competition problems. Not on its own but with Air Europa yes.

[AndrewinHK]

The EU seems to drag its feet with IAG taking over a small carrier like Air Europa but has allowed Lufthansa to take Swiss/Austrian/Brussels and soon it seems ITA. Air France/KLM also gets more than 1 billion euros of compensation payments from the French government for covid, which likely help it make a move on another carrier like TAP.

[cwoodward]

As I recall both Swiss and Brussels were bankrupt…I don’t recall re Austrian But taking over an already failed airline is rather different from perhaps aggressively taking over a healthy one-even in the EU.

[AndrewinHK]

They are still the national carriers of those nations and acquiring them whether bankrupt or not still means acquiring a dominant position in airports/countries, and Lufthansa has effectively encircled its home market. If you look at it by major airports, has a dominant position at Frankfurt/Zurich/Munich/Brussels and assuming they take ITA, Milan, and Rome. IAG for example is dominant at far fewer, but the EU competition commission tends to focus on route-specific issues, or in the TAP/Air Europa case likely on the direct country-to-country competition. I’m also not sure TAP or Air Europa could be classed as ‘healthy’ carriers.

[cwoodward]

Andrew- Are your comments re Lufthansa criteriums or merely observations. As I read them they are the former but I may well be incorrect. I see nothing at all wrong in a strong airline picking up the scraps of a failed carrier particularly in the case of Swiss the airline of a very close (in every sense) neighbour. Austrian would also perhaps fall also into that basket as would Brussels.
I was not a very close observer of the Swiss purchase but I have the impression that there were no buyers queueing at the door at the time.

[AndrewinHK]

I just question the basis of the competition authorities’ usually favorable view on Franco/German expansion. Reverting back to the thread topic, IAG is strong on the North Atlantic and seemingly has no issue with focusing on Western Europe hubs only, so one assumes having Madrid and Lisbon as hubs wouldn’t be a problem for them, as LHR and Dublin seem to work in harmony with each other. Madrid to focus more on North/Central Latam, and TAP to Brazil/Africa. Expanding Africa from Madrid/Lisbon would also make sense to funnel traffic from the UK and Northern Europe through those hubs. That being said I think it is more likely AF/KLM will be successful in acquiring TAP.

[cwoodward]

AHK -‘I just question the basis of the competition authorities’ usually favourable view on Franco/German expansion.”
What please your the basis for the above statement ?

I ask this only because you are stating this as fact not just your view point
To be clear I do not believe that there is any factual basis for your statement.

[AndrewinHK]

I suppose my point revolves more around the EC seeming to me anyway, to drag its feet when an acquisition of a solvent carrier is proposed, with Air Europa being an example, it has been more than 3 years and a decision has still not been made. The example being set seems more akin to, drive your competitor out of business, then you can acquire the parts in an almost no questions asked manner, Air Berlin being a prime example of this. Lufthansa acquired 81 aircraft from AB, and still has a monopoly on many routes, Frankfurt to Berlin etc, and Lufthansa interline with DB so not really much in the way of ground transport competition either. The ITA acquisition also as of now doesn’t seem to have flagged any response from the EC, with Lufthansa outlining it hopes to close in March, 3 months after announcing its intention, and assuming it is successful Lufthansa will monopolize routes from Rome/Milan to Frankfurt/Munich/Zurich, and that doesn’t flag any concerns.

[cwoodward]

As I recall Air Berlin failed in 2017 with Etihad owning 30% of the shares. Originally it was owned by an American agricultural company. (which is an interesting story in itself)
it seems that Lufthansa was not interested in purchasing the bankrupt airline and did not do so but did as you mention purchase most of the 81 aircraft. Even if it had been interested in AB politically the purchase may not have been allowed
Interestingly most of Bangkok Airways jet fleet are ex Air Berlin aircraft.
ITA is not exactly an acquisition and of course the route Rome – Frankfurt has low cost carriers operating as well as thought Swiss and I suspect KLM.
Is not Lufthansa’s offer for a minority stake -perhaps things have moved on ?

[AndrewinHK]

Rome – Frankfurt currently has Lufthansa and ITA dominant, and 1 Ryanair frequency to Hahn, which doesn’t seem to operate in the summer schedule, when the route is entirely LH/ITA. Lufthansa has offered to buy an ‘initial’ minority stake, reported to be 40% of the carrier. Interestingly I just saw, finally, an agreement has been reached for IAG to purchase Air Europa.

Final agreement for Air Europa to be acquired by IAG

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cwoodward

[transtraxman]

So three days after starting this thread we now have the news that IAG/Iberia is taking over the 80% of Globalia(Air Europa) which is does not own. IAG announce it now on its website.
“IAG agreement for full acquisition of Air Europa,” (24-2-23, IAG)

https://otp.tools.investis.com/clients/uk/international_airlines_group/rns/regulatory-story.aspx?cid=2457&newsid=1670244

…..as well as other sites. “IAG agrees to purchase the remaining 80% of Air Europa for 400 million euros,” (23-2-23, Aviation24.be)

IAG agrees to purchase the remaining 80% of Air Europa for 400 million euros

This situation is becoming clearer, with the way open for AF/KLM with a clear field to take over TAP. It seems that now we have reached the stage of consolidation that it is not “if” but “when” other airlines will be taken over. Let us see what happens.

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AndrewinHK, cwoodward

[transtraxman]

Yet more speculation emerges about a possible suitor for TAP. Both ITA and TAP would be quite a mouthful for any airline to absorb, even for one the size of Lufthansa.
However, in the article there is a shade of attention to go beyond those two airlines. ……”in Europe you cannot focus on one take-over candidate only.”….
….”… ITA and TAP, but I could give other names too. Whenever a candidate arises, we will keep a close eye on it and show our interest.” That, to me, looks like a direct threat to Lufthansa´s competitors. How will they react?

“Lufthansa Weighs TAP Air Portugal & ITA Airways Acquisition Prospects,” (6-3-23, Simple Flying)

https://simpleflying.com/lufthansa-tap-air-portugal-ita-airways-acquisition/

1 user thanked author for this post.

LuganoPirate

[transtraxman]

It seems like the anticipated move by Air France/KLM for TAP has already started.
“Air France-KLM keen on TAP stake; eyes fresh capital”, (10-5-23 ch-aviation)

https://www.ch-aviation.com/portal/news/127452-air-france-klm-keen-on-tap-stake-eyes-fresh-capital

Though AF/KLM as not made any formal offer it admits to being prepared to bid.

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