IAG maintains its interest in acquiring TAP Air PortugalBy Ion Jauregui –ActivTrades Analyst
International Airlines Group (IAG), which includes airlines such as British Airways, Iberia and Vueling, has reiterated its interest in acquiring a majority stake in TAP Air Portugal. The move follows the abandonment of plans to acquire Air Europa due to regulatory obstacles, underlining the strategic importance of TAP to IAG's expansion in the transatlantic market.
IAG's strategy
Lessons from the Aer Lingus acquisition: In 2015, IAG acquired Aer Lingus after committing to maintain the brand, route network and local jobs in Ireland. This strategy was key to gaining approval from the Irish government and the European Commission. IAG is likely to adopt a similar approach in the case of TAP, ensuring the preservation of the Portuguese airline's identity and operations to gain favor with the Portuguese authorities.
Regulatory and strategic considerations- Antitrust: IAG's acquisition of TAP could face scrutiny from European Union competition authorities, similar to the challenges that led to the abandonment of the Air Europa acquisition. However, the strong financial position of IAG, which recently announced the return of €1.4 billion to its shareholders after doubling its profits, could strengthen its position in the negotiations.
Technical Aspect
Currently IAG has bounced twice in the last price consistency zone where the last bounces occurred. At the moment on the weekly and daily charts the price has lost strength and the RSI is at its mid-zone at 51.82%. This current formation seems to be an impulse wave that if it accompanies with the company's movements, will make the firm's share price advance in the direction of the last 2017-2020 highs area.If the bullish formation is confirmed the first milestone to reach would be €358-368/share. If this is confirmed the stock may try to seek €426.8/share. If the formation is not confirmed it is likely that the stock will correct in the direction of the previous range of 178.42-135.23 euros/share.
Conclusion
The potential acquisition of TAP by IAG represents a strategic opportunity to consolidate its presence in the transatlantic market and strengthen its route network in South America and Africa. Competition from other European groups and regulatory considerations will be determining factors in the success of this transaction.
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