IAG says it would invest in Portugal's TAP, expand Lisbon hub

By Sergio Goncalves

LISBON (Reuters) -British Airways owner IAG said on Wednesday it would invest in Portuguese flag carrier TAP and expand its main Lisbon hub if IAG won the race for a stake in TAP's partial privatisation.

Portugal relaunched the long-delayed privatisation of TAP last week, aiming to sell a 44.9% stake to an airline that could bring global scale and competitiveness, with an additional 5% to be offered to TAP employees.

IAG is one of three major European airline groups to have shown interest in the privatisation and has had meetings with the government over the past year. The two others are Lufthansa and Air France-KLM.

"IAG welcomes the ... privatisation process. We believe TAP would flourish as part of IAG’s distinctive and proven model - one that focuses on investing in airlines and expanding strategic hubs," a company spokesperson told Reuters.

TAP's most attractive assets are its connections to Brazil, Portuguese-speaking African countries, and the United States from its Lisbon hub, which the government wants to keep and expand.

One of the criticisms that some analysts make of the potential IAG bid is that the Lisbon hub is very close to the Madrid base of IAG-owned Spanish airline Iberia and, in the long term, IAG could divert routes from Lisbon to Madrid, reducing the importance of the hub in Portugal.

But the spokesperson said that Dublin-based Aer Lingus, which has been part of IAG since 2015, has doubled its long-haul capacity despite its closeness to British Airways' London hub, giving "a compelling example of what can be achieved" with TAP.

(Reporting by Sergio Goncalves. Editing by Andrei Khalip and Mark Potter)