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Could Europe see a wave of airline mergers?


Lufthansa's official bid last week for a share and perhaps eventually all of Italy's state-owned ITA Airways brings with it a wave of rumors and speculations about other possible mergers.

The Portuguese government, which took over TAP during the first year of the pandemic, has indicated that it is willing to sell its entire stake, a change from earlier plans to hold a minority share. Among possible bidders are Lufthansa, which had previously expressed an interest, Air France/KLM and IAG Group, parent of British Air, Iberia and Aer Lingus.

Maverick Ryanair CEO Michael O'Leary, who says he is expecting a wave of consolidation—but not involving his own airline—is predicting that IAG will end up with TAP in its portfolio. O'Leary also predicts that his two main low-cost rivals, EasyJet and Wizz will be bought out by major legacy carriers in the coming months.

One argument against the likelihood of a near-term buying spree is, of course, the financial health or weakness of the big carrier groups. Air France/KLM, which had been part of an earlier bid for ITA, ventured only expertise but not capital in that deal, and may not be interested in another acquisition just now, and Lufthansa will likely want to digest ITA before making new moves.

That said, another possible take-over target is on the horizon, the bankrupt Scandinavian Airlines System, which has been living for a while on support from the three nations it is based in.

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