IAG chief sees Portugal's TAP as great fit, optimistic about privatisation

By Sergio Goncalves

LISBON (Reuters) -Portugal's soon to be privatised TAP airline would fit right into IAG's profile as a developer of airlines and hubs, also strengthening its existing operations, the CEO of the British Airways owner told Reuters on Wednesday.

"We'll have to study the process (of privatisation) and carefully consider the details, but we feel optimistic and believe that TAP can become another success story within IAG," Luis Gallego said on the sidelines of the World Aviation Festival in Lisbon.

Portugal's government is expected to approve the legal framework for the privatisation on Thursday. It has said it intends to keep a strategic stake in the carrier.

At least two other major global players - Lufthansa and Air France-KLM - have shown an interest in TAP.

IAG also owns Iberia, Aer Lingus and Vueling.

Gallego said growth in Irish carrier Aer Lingus, which has more than doubled its long-haul capacity and added nine destinations in North America since its acquisition four years ago, could serve as a model for TAP. The acquisition also helped develop the Dublin hub.

"We can jointly develop the Lisbon hub and provide significant value to Portugal and the Portuguese people...Our networks are highly complementary with many opportunities to connect passengers from Lisbon to Latin America, North America and Africa," Gallego said.

TAP operates several routes to Brazil and connects Lisbon to Portuguese-speaking countries in Africa.

"Our hubs would feed into TAP's network from IAG's home bases: Dublin, London, Madrid and Barcelona," Gallego added.

In a nod to the Portuguese government's desire to preserve the national brand and the Lisbon hub, he said that under IAG's decentralised business model, each company maintains its cultural identity, board of directors and headquarters.

"The group provides scale, for example, for fleet negotiations and supplier procurement...it also provides access to investment," he said.

TAP CEO Luis Rodrigues told the same event he expected Thursday to be a "big day" for the company, adding: "I think it (privatisation) is going to work fine" as the airline expected to post positive results for the second consecutive year after swinging to a profit in 2022.

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IAG's Gallego also said demand for travel was "very, very strong", except from the corporate sector, as it continued to recover from the impact of the COVID-19 pandemic, adding that the recovery of corporate demand in Spain was happening faster than in Britain.