IAG may possibly purchase easyJet and/or TAP

Together with Vueling, the acquisition of easyJet would allow the creation of a European low-cost giant

Shares of easyjet, Europe’s second-largest low-cost carrier, soared 6 percent on unconfirmed reports of a possible purchase of the airline by IAG (International Consolidated Airlines Group), the consortium that owns British Airways, Iberia, Aer Lingus and Vueling. IAG could also have an interest in buying the Portuguese airline TAP, in which the Air France KLM group is also seriously interested.

According to The Times, easyJet could be an imminent target of IAG, which might also try and grab TAP, Portugal’s flag carrier, which the Lisbon government is set to sell off. After a strong return to profitability in the summer, IAG has indicated that it could use its cash liquidity of €13 billion to look at more acquisitions.

The easyJet decision would make perfect economic sense, given that, together with Vueling, they would jointly create a European low-cost giant of the same size as Ryanair.

The information has been taken seriously by the markets that have started purchasing easyJet shares.

This summer, staffing problems led to countless delays and cancellations of easyJet flights, much more noticeable at the end of spring and beginning of summer, which caused tremendous problems in severance and compensation. Only during the second quarter, the company had to spend almost 150 million euros on these, causing the losses of that period.

Regarding TAP, Portugal’s government in September said it wants to sell its ailing flag carrier airline during the first half of 2023, following bailouts and re-nationalisation for a total of around EUR3.0 billion between 2020 and 2022. Acquiring TAP and consolidating it with Iberia would make IAG by far the largest provider of flights between Europe and South America.