Subtle movements show greater undercurrents in the Spanish Airline’s ball. You’ll see several previous posts about this in Scarcityrent.com (Airline movements in Europe: British Airways and Iberia on hold, Airlines corporate hunt: British Airways and TPG finally join forces to buy Iberia, Iberia and its brides… where’s the value?)
But let’s review the latest movements and their meanings. Major strategies in the Spanish airline sector are wobbly now.
Iberia has decided to open its books to TPG. They were trying to win some time waiting for things to happen but it seems they have changed their mind. Why?
- There’s not a competing strong offer for Iberia. In fact shareholders wanted to sell right away. Now they fear they could be left out in the cold with a company they no longerwant. Lufthansa is cooler every day.
- Being privileged for being the Spanish flagship carrier in a heavily regulated sector, they wanted to wait until Spain’s next election, awaiting a possible change. But change seems more unlikely each day, so there’s no point in waiting. Maybe it’s even better not to wait because the forthcoming government might even be the same but stronger.
- They had the previous objective of raising the share price to 4€, whilst the prospective buyers valued a maximum of €3,6. Have shareholders renounced to that objective?
- In other European countries things are cooling down too. See Alitalia, left with no brides, or Lufthansa drifting away towards another option (see below)
Less risk means less reward too. Looks like shareholders are aiming at speeding things even at a lower price. That’s good news for both TPG and British Airways, and for a sector that needs consolidation and clarification. Many things depend on the management of those big airlines.
And meanwhile, Spanair, the second Spanish airline, is for sale too. SAS, it’s current owner, has decided to disinvest in the company. Gonzalo Pascual, the president of the company, owner of the Spanish touristic group Marsans is about to buy it, but some things have happened too:
- Lufthansa has expressed their interest to buy the company. Although of a smaller size than Iberia, this airline has the advantadge of being in the same alliance than Lufthansa: Star Alliance, while Iberia is in the wrong one: OneWorld, lead amongst others by British Airways, direct competitor of Lufthansa, with many flights shared with Iberia and, of course, shareholder of Iberia with a 10% stake. (and, maybe, unwilling to sell to their German competitor)
- TAP, Portuguese Airline, has expressed its interest too.
Of course that means that this €450 million Airline is about to increase its price. There’s nothing like competition. Good news for SAS, of course.
This man is the one that has the key. Gonzalo Pascual, beside SAS (Scandinavian Airlines Systems) executive Joergen Lindegaard, controls Air Comet, Pullmantur, Austral and Aerolíneas Argentinas, with heavy traffic across the Atlantic Ocean and a total fleet of 90 airplanes. Spanair is their natural ally, with an additional fleet of 65 airplanes and a lot of Spanish connections that can feed their intercontinental routes.
But, you there are always other possibilities, if the Spanair acquisition were to fail, why not buying Iberia instead? It would be hard and difficult, but Gonzalo Pascual is the one Spaniard that could. That would mean removing the foundations of the whole Spanish aviation sector though.
And this way this airlines’ love triangle gets more interesting. We’ll see what happens next 😉