Iberia is for sale. After years of flirting with British Airways, now it realises that there’s not enough satisfaction in that relationship. Shareholders want to sell. And B.A. is not ready to take that step. Too many doubts. I’m sure that with a good price for that 10% they have they’d even get out.
The second bride is Lufthansa. Lots of cash and need for expansion. Alhough Iberia is in the wrong alliance. But Iberia would be a big step towards South America for Lufthansa. Conte and Mayhuber, the two bosses, denied yesterday any approach. Sometimes denial is the previous step to marriage. Although German firms have not been very lucky lately buying in Spain.
And then there is Texas Pacific Group. Good news for eficiency, bad news for workers. Iberia needs a deep refurbishing and that would mean a lot of lay offs. Many of Iberia’s workers are only worried about preserving a way of life that is already dying in most of the old flagship carriers. They have managed so far to keep their privileges while receeding to Madrid and their most profitable flights with South America. But, with a private equity firm, that would no longer be possible.
A private equity firm could drive a lot of value from Iberia, something that main shareholders didn’t feel like doing because it was not politically correct. They’d be so pleased to go home with their capital gains…
But, investors be aware, there are two risks hanging over the company.
The first, it’s most profitable route, a nice route from Madrid to Barcelona and back that until now has managed not to be canibalised by competitors, is about to get new and powerful competence: the high speed train. Probably it will cut its passengers in half, and profits with them.
And last but not least, Iberia needs to be Spanish. The routes they operate to South America and give Iberia a specially high strategic value have been built from agreements between the Spanish and South American governments. One by one, brick by brick, unsurprisingly, Madrid’s hub has been constructed from agreements based on Iberia’s spanishness and Madrid’s capitality. There would be not enough reasons to keep that exclusivity for long with skies being more open each day and with an Iberia decreasingly Spanish.