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InsideMan
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Portugal Interested In Selling TAP To LH

Fri Sep 02, 2011 12:07 pm

http://www.reuters.com/article/2011/...portugal-tap-idUSL5E7K206N20110902

as part of the ongoing privatizsations in Portugal, Pedro Passos Coelho sort of offers TAP to LH
 
ushermittwoch
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RE: Portugal Interested In Selling TAP To LH

Fri Sep 02, 2011 12:17 pm

Germany is most certainly getting nice profits out of its investment in the EU...
Where have all the tri-jets gone...
 
airbazar
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RE: Portugal Interested In Selling TAP To LH

Fri Sep 02, 2011 12:53 pm

They're not stupid. They know that if IAG buys TP, that will be not just the end of TP but the end of a new airport because LIS will become just a spoke out of the MAD hub, and LCCs won't pay for a new airport.
 
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InsideMan
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RE: Portugal Interested In Selling TAP To LH

Fri Sep 02, 2011 1:05 pm

I could see the benefits for LH.
Sell BMI, use TAP to extend operations to Brasil and Afrika.
If the price is right.....
 
JL418
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RE: Portugal Interested In Selling TAP To LH

Fri Sep 02, 2011 1:10 pm

Quoting airbazar (Reply 2):

They're not stupid. They know that if IAG buys TP, that will be not just the end of TP but the end of a new airport because LIS will become just a spoke out of the MAD hub, and LCCs won't pay for a new airport.

Well the same can be said of LH, I think, but I'm pretty confident it won't happen in both cases. TAP is an interesting airline because of its market share in the Brazilian and African markets, not because it's - with all due respect to Portugal - an enormous market from which to vacuum premium passengers. I guess that both IAG and LH will base a sort of hub in Lisbon, focused on Africa and LatAm, much like LH did with Brussels Airlines for Sub-Saharian Africa.

In my opinion IAG should be running for it, I mean for TAP. IB has a great market share of Latin America-bound intercontinental flight but I don't feel her too strong in Brazil which, instead, is going to be an important world player in some years, at least if Petrobras is to be believed.

About Lufthansa... I don't know whether they'll be ready to embark themselves in another acquisition. Austrian isn't back yet from the red, BMI is still in the shambles and last quarter results weren't as good as they hoped, if I remember well. Plus, let us not forget the LHI fiasco and the need of covering Berlin Brandeburg. And.. wouldn't it a bit too much for EU Commission's DG for Competition?
 
airbazar
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RE: Portugal Interested In Selling TAP To LH

Fri Sep 02, 2011 3:05 pm

Quoting JL418 (Reply 4):
I guess that both IAG and LH will base a sort of hub in Lisbon, focused on Africa and LatAm, much like LH did with Brussels Airlines for Sub-Saharian Africa.

That's where I disagree. I see absolutely no reason for IAG to maintain TP and it's hub at LIS. MAD is way too close and it's nowhere near capacity, so LIS and TP's network is somewhat redundant next to IB. LH however would not be so quick to dismiss LIS because of it's privileged location for LH. Not only does TP have the S.American presence that LH lacks, but LIS is on the Southeastern-most coast of Europe which gives it tremendous possibilities for air/sea/land/rail cargo integration. LIS is the first major airport in Europe for flights from anywhere in Latin America and even the Southern US. Portugal's air traffic is uncongested and weather delays are virtually unheard of. LIS would be much cheaper as a hub than any of the hubs on the LH network due to the lower cost of living in Portugal. LIS is in a great location to connect the 2 fastest growing economies of the next century Latin America and China, with TP already strongly established on one end of that equation. To put it mildly, LIS would be in a dream location for LH Cargo. And last but not least, the new LIS airport is likely to be the last brand new hub built in Europe in the next 50 years (Except maybe a new airport in Instambul). Imagine the possibilities from having input on designing and setting up a brand new hub airport in Europe. The last time LH did that we were presented with MUC, in my opinion one of the world's best and most efficient hubs. A new LIS hub with LH at the helm could be even better. Did I mention that the new LIS airport is only 15mi from the shipping port of Lisbon and that the main freight rail line and highway between Lisbon and Madrid, and the rest of Europe passes by this airport's future location?
 
bonusonus
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RE: Portugal Interested In Selling TAP To LH

Fri Sep 02, 2011 4:03 pm

Quoting airbazar (Reply 5):
. To put it mildly, LIS would be in a dream location for LH Cargo. And last but not least, the new LIS airport is likely to be the last brand new hub built in Europe in the next 50 years (Except maybe a new airport in Instambul). Imagine the possibilities from having input on designing and setting up a brand new hub airport in Europe

Portugal can only stand to win by having Germans design and build their new airport.
 
JL418
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RE: Portugal Interested In Selling TAP To LH

Fri Sep 02, 2011 6:03 pm

Quoting airbazar (Reply 5):
That's where I disagree. I see absolutely no reason for IAG to maintain TP and it's hub at LIS. MAD is way too close and it's nowhere near capacity, so LIS and TP's network is somewhat redundant next to IB. LH however would not be so quick to dismiss LIS because of it's privileged location for LH. Not only does TP have the S.American presence that LH lacks, but LIS is on the Southeastern-most coast of Europe which gives it tremendous possibilities for air/sea/land/rail cargo integration. LIS is the first major airport in Europe for flights from anywhere in Latin America and even the Southern US. Portugal's air traffic is uncongested and weather delays are virtually unheard of. LIS would be much cheaper as a hub than any of the hubs on the LH network due to the lower cost of living in Portugal

All you wrote has no fault, (apart probably for rail connectivity, but that's another issue) which leads me to think: "Why on Earth wouldn't IAG benefit from it as well?". I see that IB, in MAD, has the spaces to cope with some new long-haul planes taken from TP but why would anyone do that? TAP is a well-known brand in Brazil and Africa, why wasting such an intangible yet valuable resource for the sake of... well, a hardly useful optimization?

Quoting airbazar (Reply 5):
Imagine the possibilities from having input on designing and setting up a brand new hub airport in Europe. The last time LH did that we were presented with MUC, in my opinion one of the world's best and most efficient hubs. A new LIS hub with LH at the helm could be even better. Did I mention that the new LIS airport is only 15mi from the shipping port of Lisbon and that the main freight rail line and highway between Lisbon and Madrid, and the rest of Europe passes by this airport's future location?

It is, without a shadow of a doubt, an intriguing perspective. But: can LH do it? Corporate history is there to show us that you can only stretch a company up to a certain point and it's also telling us that most M&A destroy value rather than creating more. LH has expanded a lot in these last years, both by buying and integrating. There's no Central European carrier, Malév and CSA excluded, which is not linked or controlled by LH. And something is telling me that not every bun had its hole for LH, let us look at Austrian for example. I don't know whether LH itself can afford this new venture...

At the end of the day, my point is: it's going to be an interesting game, this one. I believe that everyone can play its card and have a fair chance of winning the prize, TAP. Even, who knows, AF-KLM. They're strong in Asia, in Africa and North America: South is what seems missing.
 
airbazar
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RE: Portugal Interested In Selling TAP To LH

Fri Sep 02, 2011 7:22 pm

Quoting JL418 (Reply 7):
All you wrote has no fault, (apart probably for rail connectivity, but that's another issue) which leads me to think: "Why on Earth wouldn't IAG benefit from it as well?". I see that IB, in MAD, has the spaces to cope with some new long-haul planes taken from TP but why would anyone do that? TAP is a well-known brand in Brazil and Africa, why wasting such an intangible yet valuable resource for the sake of... well, a hardly useful optimization?

In my opinion, MAD has essentially the same characteristics as LIS without the need to invest in a new airport, and IB is just as well known and established in Brazil as TP is, and they are expanding not only to Brazil but to Africa as well. That's why I strongly believe that IAG buying TP would be the end of TP and LIS would be relegated to a spoke.
I give zero chance of AF-KLM getting in. Both already cover Africa and Latin America quite well which are the 2 strong markets of TP.
Can LH do it? That would be quite interesting. When you look at their business model it looks an awful lot like Ryanair creating bases all over Europe, doesn't it? You could ask, why would they need these many bases? The difference is LH keeps the planes from each base in a different livery   They are in uncharted territory, no doubt.
 
MCOGVADCA
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RE: Portugal Interested In Selling TAP To LH

Sat Sep 03, 2011 2:24 am

Quoting InsideMan (Thread starter):
as part of the ongoing privatizsations in Portugal, Pedro Passos Coelho sort of offers TAP to LH

Very interesting. I also heard a rumor (so please take it with a grain of salt!) that TAM would acquire both TAP and TAAG and would merge to form a grand Lusophone Atlantic carrier. Considering the importance of TAM and TAP to one another's networks, I didn't think it was that far-fetched....which is why I was quite surprised when TAM ended up being acquired and not an acquirer. If LATAM falls through for regulatory reasons (although this seems rather unlikely at this point), would there be ownership restrictions on a potential TAM/TAP merger, with TAM as the acquirer?
12 months: mdl heh rgn kmg nng sha gmp icn can pvg sfo mco lwc sin dps cdg gva
 
kiwiandrew

RE: Portugal Interested In Selling TAP To LH

Sat Sep 03, 2011 2:32 am

Quoting MCOGVADCA (Reply 9):
would there be ownership restrictions on a potential TAM/TAP merger, with TAM as the acquirer?

I believe that there would be restrictions on the acquisition of TP by any non-EU airline.
 
328JET
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RE: Portugal Interested In Selling TAP To LH

Sat Sep 03, 2011 4:07 am

I think that would be a perfect combination.

Lufthansa has to fill the potential gap of TAM and TAP needs a strong partner which has no intentions to scale down TAP because of direct competition, as Iberia would do.

Probably i am wrong with my view about LH and BMI and LH will sell BMI in favour of buying TAP?

As a side-note, TAP has one of the greatest liveries in my eyes!
 
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Semaex
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RE: Portugal Interested In Selling TAP To LH

Sat Sep 03, 2011 10:13 am

Quoting JL418 (Reply 4):
About Lufthansa... I don't know whether they'll be ready to embark themselves in another acquisition. Austrian isn't back yet from the red, BMI is still in the shambles and last quarter results weren't as good as they hoped, if I remember well. Plus, let us not forget the LHI fiasco and the need of covering Berlin Brandeburg. And.. wouldn't it a bit too much for EU Commission's DG for Competition?

About Lufthansa:
They are doing everything they can to get OS in the blacks again, and quite frankly it isn't very surprising that this takes a long time, looking at the state that OS was in before the takeover. Yet the red numbers are getting smaller every year, and a takeover of this scale isn't meant to make a profit immediately. It is a long-term investment, and I strongly think that the direction OS is going now is the right one. I would expect them to turn black no later than FY2013.
BMI is a different matter and there was a thread about it just a few days ago. In short: LH is trying to get a 'partner' which is willing to shoulder the ongoing mess at BMI. Some interpret as turning BMI into a joint-venture with VS or whoever, others say LH are trying to get rid of BMI altogether. It's always a shame to see a formerly well-run carrier sink so rapidly, but we can, without a doubt, say that LH tried its best in making this airline work again. Well, some things are not meant to be, and the strength of LH is to know when the time is right to drop a venture.
The "LHI fiasco" is based yet on another kind of strategic move by the LH board. As easy as that: Drop LHI in favour of EN! I wouldn't call it a fiasco at all, it's strenghtening one daughter-company in order for both daughter-companies working in the same market not to kill each other. Besides: LHI had a great product and left a positive impression on the Milano-bound pax which formerly flew AZ. You could almost call it a very expensive advertising campaign!
And finally, BER. There is not really anything to say about it. LH has more than once stated that BER will be nothing more than a "focus city". So is HAM, no stationed a/c like a hub, but more flights than a simple airport. This is the BER-strategy, which in time might change, but so far it's the proper move. Unless you want to station premium aircraft in a low-cost city...


Back to the topic at hand:
I truely see LH wanting to get a big stake in TAP. I can also imagine IAG wanting to have a piece of the cake. But if it comes face-to-face, I believe TAP (or for that matter the Portugese government) will opt in favour of LH, regardless whether their offer may be less attractive. As has been mentioned before, MAD is not at its maximum utilization yet, and a move by IB would certainly have exactly that in mind; optimizing traffic flow through MAD. If the means of getting there include sucking traffic out of LIS, then this is what it's going to look like. TAP not expanding? Likely.
On the other hand LH: What is their interest in TAP? Well, not really any if you look at their continental network. But South-America is a hot cake, and it wants to be eaten! LH presence in S-A is quite limited, they need TAP in order for them to increase their (=LH Empire) strategic postition there. Which is exactly the opposite of what IAG would likely do.
Concerning TAP presence in Africa: Under IAG there could probably be an increase in traffic flow out of LIS, since both BA and IB have not the biggest network to the south. Under LH the scenario is the other way around: SN is meant to cover the African continent, so TAP's focus will further shift to S-A. Maybe that's a way of increasing traffic through LIS as well... ?
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kelual
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RE: Portugal Interested In Selling TAP To LH

Sat Sep 03, 2011 10:35 am

I see this more as a hope than a reality. IAG (IB) it's been interested in TAP since 2001. So TAP will be IAGs new acquisition.
 
Amsterdam
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RE: Portugal Interested In Selling TAP To LH

Sat Sep 03, 2011 12:57 pm

Lufthansa
Swiss
Austrian
SAS
TAP Portugal
Brussels Airlines
BMI (/Virgin Atlantic)


This could be the group in 1, 2 years time.

+
100% Germanswings
100% Blue1
100% Wideroe
100% Air Dolomiti
100% Portugalia
49% Eurowings
20% Air Macau
19% JetBlue
22,5% Ukraine International
50% SunAir
25% Jade Cargo
13% Luxair
 
airbazar
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RE: Portugal Interested In Selling TAP To LH

Sat Sep 03, 2011 1:20 pm

Quoting Semaex (Reply 12):
Concerning TAP presence in Africa: Under IAG there could probably be an increase in traffic flow out of LIS, since both BA and IB have not the biggest network to the south. Under LH the scenario is the other way around: SN is meant to cover the African continent, so TAP's focus will further shift to S-A. Maybe that's a way of increasing traffic through LIS as well... ?

SN and TP are not entirely redundant because TP has a lot of O&D from Portugal to Africa. Making all those passengers travel up to BRU to connect is not really an efficient way to deal with it. If LH were to take on TP I could see TP playing an even bigger role in Africa due to the physical location of LIS. Even in the best of scenarios, SN wouldn't be able to absorb all of TP's passengers. No one in Europe can offer double daily A340/A330 service to LAD for example. Despite the detour, some people would be surprised at how many passengers TP connects between Brazil and Angola. SN can't do that either.

Quoting Semaex (Reply 12):
I see this more as a hope than a reality. IAG (IB) it's been interested in TAP since 2001. So TAP will be IAGs new acquisition.

I also see this as a hope move, but unlike you I see TP not being sold to any major carrier at all. The government already stated that a precondition to sell TP is to maintain it's operations and hub in LIS and IAG will not agree to it. There is very strong opposition in Portugal, from the government and the business community to allow TP to fall into IB's hands. If IAg is the only option I suspect you will see a group of private investors come forward as my option b) below. In my opinion TP has missed the privatization boat. A couple of years ago they were ripe for it and the government blew it. I strongly believe that LH buying SN was plan B, and that their plan A was for TP.

In my opinion I see one of these 2 scenarios developing:
1) TP is not sold at all. It will limp around for a few years then disapear. Someone may pick up the scraps.
2) TP will be sold off to different private investors with the government maintaining a controling majority in the airline.
 
LipeGIG
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RE: Portugal Interested In Selling TAP To LH

Sat Sep 03, 2011 2:32 pm

I see a big Latam (the merger of Lan+Tam) component driving the decision.

IAG have a good coverage of Latin America with no doubt, but as said, with few exceptions, TP network do not add so much to them. In the other hand, LH does not have so strong coverage of Latin America but all they will got are secondary markets in Brazil.
The big difference in my view comes when we remove LA or JJ from their networks (and more to LH) and that's why i believe for LH, TP is more strategic because also puts a hub near its competitor MAD operation, and gain muscle on a weak area.
Of course, with that, IAG may be looking to move into protect their market.
New York + Rio de Janeiro = One of the best combinations !
 
realsim
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RE: Portugal Interested In Selling TAP To LH

Sat Sep 03, 2011 5:51 pm

When talking about this topic, everybody assumes that IAG would for sure dehub LIS. It's like assuming that AF would dehub AMS, LH would walk away from BRU, ZRH or VIE, etc.

TP's and IB's network overlaps the same than TP's and AF's and TP's and LH's, with the exception of the 3w flights to FOR and REC. Outside Brazil, TP only flies to CCS, where IB, AF and LH already fly, so the overlap between IB and TP in Latin America outside Brazil is almost zero. In Brasil, both fly to GIG and GRU, it's true, but AF and LH also do it. It's true that MAD and LIS are close, and that when the high speed rail is built, it will be even closer (although it is suspended on the Portuguese side right now), however, as TP's O&D is higher from Brazil, IAG could decide to use MAD to Latin America outside Brazil, and LIS for the rest.

The merger betwen LA and JJ is also an important factor here, because if TP was in OW, it would be another reason for LATAM to stay in the alliance.

And finally, here everybody talks about IB, but IAG is controlled by BA, and given the links between Portugal and the UK, I think that the Portuguese Government shouldn't be so worried about it.

IAG TATL network with TAP:

 
airbazar
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RE: Portugal Interested In Selling TAP To LH

Sun Sep 04, 2011 2:38 am

Quoting realsim (Reply 17):
When talking about this topic, everybody assumes that IAG would for sure dehub LIS. It's like assuming that AF would dehub AMS, LH would walk away from BRU, ZRH or VIE, etc.

Apples and Oranges. Comparatively speaking LIS and Portugal are a poor O&D market. AMS/ZRH, and BRU/VIE to a lesses extent have much wealthier and larger O&D markets of their own, and AMS and ZRH are sizable hubs on their own right while LIS is a fairly small one. MAD could easily absorb all of TP's operations, while CDG and FRA/MUC could not absorb KL's and LX's operations.
 
JL418
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RE: Portugal Interested In Selling TAP To LH

Sun Sep 04, 2011 11:02 am

Quoting airbazar (Reply 8):
Can LH do it? That would be quite interesting. When you look at their business model it looks an awful lot like Ryanair creating bases all over Europe, doesn't it? You could ask, why would they need these many bases? The difference is LH keeps the planes from each base in a different livery   They are in uncharted territory, no doubt.

Indeed, that's what I was thinking about. From one hand it's great to see that they are expanding a lot and spreading their culture of high quality service but, from the other hand, I'm beginning to think that they're stretching a little bit too far.

Quoting Semaex (Reply 12):
The "LHI fiasco" is based yet on another kind of strategic move by the LH board. As easy as that: Drop LHI in favour of EN! I wouldn't call it a fiasco at all, it's strenghtening one daughter-company in order for both daughter-companies working in the same market not to kill each other. Besides: LHI had a great product and left a positive impression on the Milano-bound pax which formerly flew AZ. You could almost call it a very expensive advertising campaign!

I know I'm massively off-topic on such a thread so I won't go on further, but I tend to disagree.

Quoting Semaex (Reply 12):
And finally, BER. There is not really anything to say about it. LH has more than once stated that BER will be nothing more than a "focus city". So is HAM, no stationed a/c like a hub, but more flights than a simple airport. This is the BER-strategy, which in time might change, but so far it's the proper move. Unless you want to station premium aircraft in a low-cost city...

My point was: LH is busy on many "fronts" now and there's a limit to the managing skills of a company. History tells that M&A very often distroy value rather than creating it and pose management and control under strain. You can keep on expanding up to a certain point when a conglomerate's sheer dimensions become huge and senior management cannot run every part of the business properly.
 
koruman
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RE: Portugal Interested In Selling TAP To LH

Sun Sep 04, 2011 12:20 pm

I'm not sure that airbazar gets the demographics of TAP's routes to Brazil and Africa. These markets are O+D exclusively and the financial viability is all about Brazil's rapid economic growth and Angola's oil wealth, especially as large numbers of Portuguese people are now moving to the two countries for very highly paid work.

If someone tried to hub that traffic via Madrid, some other airline would introduce direct services and clean up.
 
TeamintheSky
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RE: Portugal Interested In Selling TAP To LH

Sun Sep 04, 2011 2:18 pm

While definitely the least vocal about their possible intentions, I am surprised AF is not getting talked about more as a possible partner from TP. In an article I read several months back, it sounded like all three conglomerates (IAG, LH, AF) were interested in this "once in a lifetime" opportunity.

While unlikely because it seems that LH is impervious to any EU competition commission concerns, if LH was blocked and the Portuguese did not want to sell to IAG due to drawdown fears, AF could be a good partner. They probably have the least overlap, and their hubs are certainly far enough away that you would see no drawdown at LIS. They would also bring another carrier into the Skyteam fold, which would be great for the alliance that is by far the weakest in South America.
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airbazar
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RE: Portugal Interested In Selling TAP To LH

Sun Sep 04, 2011 3:11 pm

Quoting koruman (Reply 20):
I'm not sure that airbazar gets the demographics of TAP's routes to Brazil and Africa. These markets are O+D exclusively and the financial viability is all about Brazil's rapid economic growth and Angola's oil wealth, especially as large numbers of Portuguese people are now moving to the two countries for very highly paid work.

If someone tried to hub that traffic via Madrid, some other airline would introduce direct services and clean up.

I'm not sure what you're saying. What other airline would introduce service? Portugal is hardly the place to start a new full service carrier. Yes, if IAG were to buy TP and move their ops to MAD they would probably still keep a few flights between Brazil and LIS but it would be a far cry from what TP has today. They would probably run a few W patterns: MAD-GRU-LIS-GRU-MAD.

TP's routes to Brazil are not exclusively O&D by any means. TP connects a LOT of passengers between Italy/France/Germany/Spain and Brazil. The flights to the NE carry as much as 40% connecting passengers. The fact that there are hadly any charter ops between Portugal and Brazil should tell you something about the O&D market. Angola is more O&D heavy but it also has a good share of connecting passengers by virtue of being the only European carrier with daily flights, sometimes double daily.
 
bill142
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RE: Portugal Interested In Selling TAP To LH

Sun Sep 04, 2011 3:46 pm

The article to me sounds like an attempt to extract a formal bid from IAG or that talks with IAG have broken down and now the Portuguese need another suitor and soon to meet their bailout conditions.
 
OP3000
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RE: Portugal Interested In Selling TAP To LH

Sun Sep 04, 2011 6:31 pm

I see TP as most interesting an acquisition for LH than for anyone, and all things equal they are the best fit for Portuguese interests. TP bleeds money badly, and LH has significantly more experience than IAG or LATAM in purchasing and then turning around European legacies back to competitive and profitable levels. And on value-added LH would not only capitalize on and provide strong feed to the large Brazilian network, but LIS is a well-located airport which with a new terminal could take some share from MAD as a feeder hub to Latin America.
 
AIR MALTA
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RE: Portugal Interested In Selling TAP To LH

Sun Sep 04, 2011 6:34 pm

Portugal should not care about whom its sells TAP. It should try to get the highest bid be it from AF/KL or IAG. May be it is the proof of the fact that Germans want to dominate Europe by buying airlines, debts, etc...
Next flights : BRU-ZRH-CAI (LX)/ BRU-FCO-TLV (AZ)
 
airbazar
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RE: Portugal Interested In Selling TAP To LH

Mon Sep 05, 2011 1:16 am

Quoting OP3000 (Reply 24):
TP bleeds money badly

Sort of true, sort of not. The TAP group loses a lot of money from businesses not associated with the TP (the airline).
The airline itself is relatively well run an has been profitable most years since 2000. I wouldn't expect a potential buyer to want anything more that the airline business only, and maybe the maintenance business in Portugal.

Quoting AIR MALTA (Reply 25):
Portugal should not care about whom its sells TAP. It should try to get the highest bid be it from AF/KL or IAG.

That would be bad. Short term gratification will solve nothing. TAP is a fundamental piece of the Portuguese economy. A high bidder whose only intention is to remove competition from the market does not help the Portuguese economy, nor the portuguese traveling public. On the other hand, beggers can't be choosers  
 
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MillwallSean
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RE: Portugal Interested In Selling TAP To LH

Mon Sep 05, 2011 1:44 am

Selling TP is a good idea to get some funds for Portugal. Its debt is way to large. Portugal however is quite different from Spain. By history it used to be an ally of England, see the Napoleon wars etc. Spain has always been its competitor. Selling out to the british might have been ok but I doubt any portuguese government will sell its airline to the Spanish. And IAG will be viewed as that.
I see it as more likely that the Portuguese government will keep a minority stake in TP for quite some time and that it will sell to either LH or AF or a pointless sale of say 25% to venture capital or a gulfcarrier (No clue why a gulfcarrier would want this but... QR seem to want to buy anything so it wouldnt surprise me if they put in a bid)

Quoting koruman (Reply 20):
I'm not sure that airbazar gets the demographics of TAP's routes to Brazil and Africa. These markets are O+D exclusively and the financial viability is all about Brazil's rapid economic growth and Angola's oil wealth, especially as large numbers of Portuguese people are now moving to the two countries for very highly paid work.

Nope they are not. TP has a healthy mix of Europeans travelling on to Brazil. usually about 30% on many of their flights. Their own OD traffic for the Portuguese diaspora might be taking the bulk but the transfer traffic has been increasing for years.
The Angola route sees some of the worlds largest oilrelated companies buy seats in block. I would say the Luanda route is TP little goldmine.

Quoting TeamInTheSky (Reply 21):
While unlikely because it seems that LH is impervious to any EU competition commission concerns, if LH was blocked and the Portuguese did not want to sell to IAG due to drawdown fears, AF could be a good partner. They probably have the least overlap, and their hubs are certainly far enough away that you would see no drawdown at LIS. They would also bring another carrier into the Skyteam fold, which would be great for the alliance that is by far the weakest in South America.

I agree with what you say. I see AF and LH as the most serious contenders for the Portuguese government stake.
And no the EU wont have any issues with this. LH doesn't have a marketshare that's remotely close to marketdominant in the EU. In order for the EU to act or even think of stopping a purchase an airline has to reach at least 25% of marketshare in the EU. So no LH doesn't get special treatment they just aren't close to a dominant position.
On local markets though they might be considered to harm competition, ie some routes between Portugal and LH owned airlines hubs. here they might have to give up slots to possible entrants.
That might be the same for AF too by the way.

Quoting AIR MALTA (Reply 25):
Portugal should not care about whom its sells TAP. It should try to get the highest bid be it from AF/KL or IAG. May be it is the proof of the fact that Germans want to dominate Europe by buying airlines, debts, etc...

yeah because buying airlines makes you dominant. Such profitcentres.
if germany wanted to dominate Europe it could have stopped supporting and paying the debts of the countries who seem to think its ok to have debts close to 100% of its GDP. And perhaps stop funding half of EU:s budget or so...
Then they could by so many distressed assets its not even funny to think about...
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airbazar
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RE: Portugal Interested In Selling TAP To LH

Mon Sep 05, 2011 3:37 am

Quoting MillwallSean (Reply 27):
Selling TP is a good idea to get some funds for Portugal.

TP's sale will come at ZERO cost to the government so therefore it will solve nothing to pay back the country's debt.
If TP indeed gets sold, either it will be for very little money due to it's current 400 million Euro debt, or the portuguese govt will take up the debt in order to find a buyer. Either way the govt won't make much or any money on the sale.
 
SXDFC
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RE: Portugal Interested In Selling TAP To LH

Mon Sep 05, 2011 9:22 am

Although this is probably the LEAST of the worries right now, with a new buyer of TP, how would this effect their fleet? Could we see some Boeing's return to TP?
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MillwallSean
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RE: Portugal Interested In Selling TAP To LH

Mon Sep 05, 2011 9:50 am

Since TP has chosen the A350 for longhaul already I don't see another longhaul plan in their fleet. the narrowbody fleet isnt old by any means so i don't see a pressing need for change there. And when that change occurs Airbus will be in the driver seat since it's a replacement at an all Airbus airline.
TP have taken delivery on some rather new A320 etc two years ago indicating that they see no need for a complete fleet overhaul.

I don't see Boeing returning to TP for the forseeable future. They have no need for them.

Smaller planes though operated by the subsidiary Portugalia is another story. I know they signed lifetime agreements for service with rekkof or Fokker or what they are called. but these planes are 20 years plus on average.
Eventually a new plane for Portugalia must be on the cards.
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bennett123
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RE: Portugal Interested In Selling TAP To LH

Mon Sep 05, 2011 10:06 am

http://www.airfleets.net/ageflotte/PGA%20Portugalia%20Airlines.htm

The Fokker 100 are over 20 years, so replacement will soon be an issue.

Unless something dramatic happens soon, I do not see Rekkof being a contender. What about Embraer.
 
LHRFlyer
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RE: Portugal Interested In Selling TAP To LH

Mon Sep 05, 2011 11:59 am

I not sure AF-KLM is a strong contender to buy TAP. Looking at the net debt levels for the three European majors:

AF-KLM: 6 billion euros
IAG: 480 million euros
LH: 1.4 billion euros

http://www.reuters.com/article/2011/...uk-airfrance-idUSLNE78104J20110902

All three will look at TAP. They would be negligent not to do so, but I think IAG and LH are well placed.
 
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Semaex
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RE: Portugal Interested In Selling TAP To LH

Tue Sep 06, 2011 6:06 pm

Quoting airbazar (Reply 15):

I also see this as a hope move, but unlike you I see TP not being sold to any major carrier at all. The government already stated that a precondition to sell TP is to maintain it's operations and hub in LIS and IAG will not agree to it.

Quoting function may be erroneous again, please be aware that the one you quoted was not actually me.

Quoting JL418 (Reply 19):

My point was: LH is busy on many "fronts" now and there's a limit to the managing skills of a company. History tells that M&A very often distroy value rather than creating it and pose management and control under strain. You can keep on expanding up to a certain point when a conglomerate's sheer dimensions become huge and senior management cannot run every part of the business properly.

By all means, I know what you are talking about. And you are right, historically proven, the bigger a company gets, the more fragile to control it becomes. It's like a christmas tree that you want to decorate until all the twigs and branches break. My poor memory reminds me of the Daimler desaster; build a "global player", buy up car manufacturers, expand into non-automobile branches, become bigger and bigger. It ended badly.
However, and this is where the subjective gut-feeling comes into action, there is a strong party of people (especially on this forum) that tend to have a certain picture of Lufthansa, which too speaks from experience. Lufthansa, an airline which was shamelessly used to aid in a tragic war became non-existent in a time when airlines around the world grew their best reputation. The german government pushed it to a global airline status, it went into complete public control less than fifteen years ago and kept on growing not only by eliminating or aquiring competitors, but by offering a decent product themselves. I may be wrong in this view, but from what I witness every day it seems to me that Lufthansa's effort is not to simply make money, but to be sustainable in all its working areas.
What I've heard more than once on this forum was in between the lines of "If anyone can do it, Lufthansa can....".
Just refer to the following quotiation:

Quoting OP3000 (Reply 24):
I see TP as most interesting an acquisition for LH than for anyone, and all things equal they are the best fit for Portuguese interests. TP bleeds money badly, and LH has significantly more experience than IAG or LATAM in purchasing and then turning around European legacies back to competitive and profitable levels. And on value-added LH would not only capitalize on and provide strong feed to the large Brazilian network, but LIS is a well-located airport which with a new terminal could take some share from MAD as a feeder hub to Latin America.

---------------------

Quoting AIR MALTA (Reply 25):
Portugal should not care about whom its sells TAP. It should try to get the highest bid be it from AF/KL or IAG. May be it is the proof of the fact that Germans want to dominate Europe by buying airlines, debts, etc...

For the sake of the quick buck yes, Portugal should go for the highest bid. But like I made myself clear before, fortune does not seem to be on the side of the fast money, but the sustainable game.
As for the rest of your post, I strongly recommend sticking to argument, not stereotype.
// You know you're an aviation enthusiast when you look at your neighbour's cars and think about fleet commonality.
 
Burkhard
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RE: Portugal Interested In Selling TAP To LH

Tue Sep 06, 2011 7:36 pm

Whwn it comes to competition concerns.
In case of LH, it is competition for traffic between Germany and Portugal.
In case of IAG, it is competition for traffic beween UK and Spain to Portugal.

I assume the second to be large, while the few daily flights TAP has into Germany or LH has into Portugal are peanuts - and already covered by Star Alliance cooperation.
 
airbazar
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RE: Portugal Interested In Selling TAP To LH

Tue Sep 06, 2011 8:01 pm

Quoting Burkhard (Reply 34):
I assume the second to be large, while the few daily flights TAP has into Germany or LH has into Portugal are peanuts - and already covered by Star Alliance cooperation.

The way I see it neither are relevant. European "domestic" traffic is for the birds. No legacy carrier will make money on p2p intra-Europe routes. It is the domanin of the LCCs. However, that traffic is still very important to feed international growth. TP does not cover the UK all that well. They do a better job in Germany, France, Spain, and Italy because that's where the connecting traffic to/from Brazil is.
 
realsim
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RE: Portugal Interested In Selling TAP To LH

Tue Sep 06, 2011 9:21 pm

Quoting Burkhard (Reply 34):
Whwn it comes to competition concerns.
In case of LH, it is competition for traffic between Germany and Portugal.
In case of IAG, it is competition for traffic beween UK and Spain to Portugal.

I assume the second to be large, while the few daily flights TAP has into Germany or LH has into Portugal are peanuts - and already covered by Star Alliance cooperation.

In Spain, the only routes where IB and TP overlap are MAD-LIS/OPO, and LIS-BCN if you count VY. However, in all of the routes there's LCC competition. LIS-MAD, especially, is very competitive now.

(Number of flights tomorrow)

LIS-MAD: 6x IB, 6x TP, 3x U2, 3x UX
LIS-BCN: 6x TP, 2x VY, 1x U2
OPO-MAD: 3x FR, 4x IB, 3x

In the United Kingdom, IAG would be the only between LIS and LHR, so maybe a slot could be required for another carrier in the route:

LIS-LHR: 6x TP, 4x BA
LIS-LTN: 2x U2
LIS-LGW: 1x TP, 1x U2
 
incitatus
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RE: Portugal Interested In Selling TAP To LH

Tue Sep 06, 2011 9:38 pm

Quoting airbazar (Reply 18):
Apples and Oranges. Comparatively speaking LIS and Portugal are a poor O&D market. AMS/ZRH, and BRU/VIE to a lesses extent have much wealthier and larger O&D markets of their own, and AMS and ZRH are sizable hubs on their own right while LIS is a fairly small one. MAD could easily absorb all of TP's operations, while CDG and FRA/MUC could not absorb KL's and LX's operations.

Your argument does not hold water against the strategies of AF/KL and LH+all. Now you are splitting hairs hoping to keep it together.

We are yet to see the EU say no to a LH acquisition, while it vetoed a much less relevant one in Greece - one that was good for Greece.
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kiwiandrew

RE: Portugal Interested In Selling TAP To LH

Tue Sep 06, 2011 10:21 pm

Quoting incitatus (Reply 37):
We are yet to see the EU say no to a LH acquisition, while it vetoed a much less relevant one in Greece - one that was good for Greece.

While I don't think that the OA/A3 merger should necessarily have been blocked, I also don't think that you are comparing like with like. The OA/A3 merger would be more comparable to LH trying to take over Air Berlin ( which I very much doubt the EU would approve ) than to acquring carriers in other countries.
 
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MillwallSean
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RE: Portugal Interested In Selling TAP To LH

Wed Sep 07, 2011 12:01 am

Quoting incitatus (Reply 37):

We are yet to see the EU say no to a LH acquisition, while it vetoed a much less relevant one in Greece - one that was good for Greece.

Please read through the EU competition rules.
They vetoed the one in Greece because it took control over 85% of the domestic market. That is not good for the consumer and is against the EU rules. It might have been good for Greece in your eyes but not in the consumer watchdogs eyes.

If LH want to get in trouble with EU they have to buy Air berlin. Then we will see issues. LH as it is today isn't close to a market dominating situation in Europe. they don't have 10% of the flights or market. How people can't scream for them to be blocked on competitive grounds beggars belief when a quick read of the EU rules would solve all those misunderstandings and cheap shots at a successful business.

IF LH takes over TP we might see issues on key routes such as lets say FRA-LIS where a combined LH/TP will have a too high marketshare. Thats offset by LH allocating a certain amount of slots for any potential new entrant.
Thats how the EU competition authority works, its mission is to see if any marketshare is deteriment to competition. Aegean and Olympic is an obvious case. Me I was surprised to see Air one and Alitalia get through without that many concessions. Italy must see more competition that expected.
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incitatus
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RE: Portugal Interested In Selling TAP To LH

Wed Sep 07, 2011 12:33 am

Quoting MillwallSean (Reply 39):
Please read through the EU competition rules.
They vetoed the one in Greece because it took control over 85% of the domestic market. That is not good for the consumer and is against the EU rules. It might have been good for Greece in your eyes but not in the consumer watchdogs eyes.

Exactly, the watchdog is biased.

The Greek domestic market is as relevant as the Californian or the Intra-Florida domestic market. The EU is a single aviation market.

Quoting MillwallSean (Reply 39):
Thats how the EU competition authority works, its mission is to see if any marketshare is deteriment to competition.

Its mission is selectively defined to allow the creation of national champions in the core countries of the EU.
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commavia
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RE: Portugal Interested In Selling TAP To LH

Wed Sep 07, 2011 12:47 am

Quoting airbazar (Reply 2):
They're not stupid. They know that if IAG buys TP, that will be not just the end of TP but the end of a new airport because LIS will become just a spoke out of the MAD hub, and LCCs won't pay for a new airport.

I don't necessarily disagree with many of your points. It is true that, strategically speaking (broader than just the airline industry), Portugal is, indeed, a small, poor, and relatively less important country on the periphery of Europe. It's location is somewhat strategic, perhaps, although the continual British presence in Gibraltar and the U.S. Sixth fleet in Naples are far more important to guaranteeing freedom of access to the Med than Portugal's location could ever be. And economically, Portugal has a lower standard of living, weak political fundamentals, and a sovereign debt problem. TAP is an interesting airline that always seems to be tottering between some rather inventive, innovative approaches to making the most of its home market's economic and geopolitical realities, and on the other hand being a weak, uneconomic concern reflective of its home country. All of that is true - it would be as true if TAP remained independent (i.e., government-subsidized), whether it was purchased by Lufthansa, or whether it was purchased by IAG.

The fallacy - in my opinion - with your statement is that you believe that somehow TAP's fate would be less tied to the realities of its geography and economics if Lufthansa took over than IAG, simply based on the fact that IAG happens to have a major hub closer by. But that misses an important point: proximity does not necessarily represent duplication, particularly with regard to international markets. The true strategic value of TAP is and will be - for whoever buys it - its longhaul network, not its smallish European system. And, contrary to your suggestions, TAP's international network could not just be easily moved 300 miles east and recreated. TAP's longhaul network is based on strong ethnic, cultural, political and economic connections between Portugal and former Portuguese colonies and current centers of Portugues diaspora in Africa and the Americas - that market will not move to Madrid. It will stay at Lisbon whether TAP is serving it or not - if IAG moved the flights to Madrid, a new airline would backfill in Lisbon. IAG knows this.

TAP has a strong franchise in many markets in Africa where BA/Iberia are either weak or non-existent - same in Latin America where Iberia is the 800 lb gorilla just about everywhere except Brazil where TAP handily dominates. IAG no doubt sees value in this rather impressive (for such a small airline/country) longhaul network, and knows that it cannot be transcribed onto the Madrid hub (however tempting, I agree, that may seem). Ultimately, I highly doubt that if IAG were hypothetically to buy TAP, they would give up - squander - the one thing they would no doubt be after!
 
airbazar
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RE: Portugal Interested In Selling TAP To LH

Wed Sep 07, 2011 3:26 am

Quoting incitatus (Reply 37):
Your argument does not hold water against the strategies of AF/KL and LH+all. Now you are splitting hairs hoping to keep it together.
We are yet to see the EU say no to a LH acquisition, while it vetoed a much less relevant one in Greece - one that was good for Greece.

I think you quoted the wrong post  
I'm not sure how my argument of the pros and cons of dehubing LIS has anything to do with EU anti-competition rulings.

Quoting commavia (Reply 41):
And, contrary to your suggestions, TAP's international network could not just be easily moved 300 miles east and recreated. TAP's longhaul network is based on strong ethnic, cultural, political and economic connections between Portugal and former Portuguese colonies and current centers of Portugues diaspora in Africa and the Americas - that market will not move to Madrid.

That's a fair point especially if you're speaking about Angola and Sao Tome' and EWR, so far. But not Brazil anymore. TP's Brazil network is sustained by connecting traffic, as much as 40% is connecting traffic to/from Europe. There are destinations in Brazil that are seein over 50% connecting traffic. Remove the connecting traffic and you'd have maybe 30 weekly flights between Portugal and Brazil. Not the existing 70 flights. The percentage of connecting vs. O&D traffic for TP keep growing every year.
There are other signs that TP has realized that they can't sustain their business on lusophone markets alone. They have completely withdrawn from JNB and reduced MPM. Yes, JNB was all driven by VFR traffic. In exchange they have started a few very non-TP markets such as MIA, Bamako, Accra, and Moscow. This is a clear shift in their business model.
 
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Semaex
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RE: Portugal Interested In Selling TAP To LH

Wed Sep 07, 2011 3:30 pm

Quoting airbazar (Reply 42):

There are other signs that TP has realized that they can't sustain their business on lusophone markets alone. They have completely withdrawn from JNB and reduced MPM. Yes, JNB was all driven by VFR traffic. In exchange they have started a few very non-TP markets such as MIA, Bamako, Accra, and Moscow. This is a clear shift in their business model.

Out of curiosity; how well do these markets go? Is it a viable new business model for TAP?
// You know you're an aviation enthusiast when you look at your neighbour's cars and think about fleet commonality.
 
airbazar
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RE: Portugal Interested In Selling TAP To LH

Wed Sep 07, 2011 3:53 pm

Quoting Semaex (Reply 43):
Out of curiosity; how well do these markets go? Is it a viable new business model for TAP?

Other than Moscow, all of these are new this year so too soon to tell. But Moscow did well enough that TP wanted to increase it from 5x to 9x weekly but were denied authorization by Russia. MIA supposedly is doing very well too. The other African markets are nearly all connecting markets. I can't imagine that much O&D traffic to Bamako/Accra/Abidjan from Portugal.

Even LAD is somewhat of an artifical market for TP. The only way TP can maintain that many frequencies is because the Angolan government prevents other European airlines from having more frequencies so passengers and especially cargo from all over Europe transit thru LIS. It's not unusual to have 50% and 60% LF on the LIS-LAD route but the yields still justify operating the route. If Angola would allow LH/AF/BA to operate at least 5x weekly into LAD I guarantee you that TP's LAD route would suffer significant cuts.
 
latinthug
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RE: Portugal Interested In Selling TAP To LH

Thu Sep 08, 2011 11:42 pm

With IB pulling out of REC and FOR,

is this a sign that a deal has been made by IAG to buy TP ????
 
Speedbird741
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RE: Portugal Interested In Selling TAP To LH

Fri Sep 09, 2011 12:04 am

Quoting LatinThug (Reply 45):
is this a sign that a deal has been made by IAG to buy TP ????

That thought keeps crossing my mind. Perhaps it's not that a deal has been made, but that IAG is preparing to be in a position that pleases competition authorities as much as possible. I sincerely hope IAG comes to incorporate TAP rather than Lufthansa.

Speedbird741
Boa noite Faro, Air Portugal 257 climbing flight level 340
 
incitatus
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RE: Portugal Interested In Selling TAP To LH

Fri Sep 09, 2011 1:56 am

Quoting LatinThug (Reply 45):
With IB pulling out of REC and FOR,

And there (further) goes down the drain airbazar's idea that all TP flying can be esily shifted to MAD if it is absorbed into IB/BA.
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airbazar
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RE: Portugal Interested In Selling TAP To LH

Fri Sep 09, 2011 2:22 am

Quoting incitatus (Reply 47):
And there (further) goes down the drain airbazar's idea that all TP flying can be esily shifted to MAD if it is absorbed into IB/BA.

That's not exactly what I said. I said hub operations, meaning all connecting traffic and thus eliminating a huge amount of TP's frequencies to Brazil. I did say that LIS would become just a spoke from MAD. Obviously I was exagerating to make a point. It's debatable that all of TP's routes to Brazil are profitable. Maybe IB is far more averse to losses than TP is. But I think one big reason why IB is leaving REC and FOR is because the A343 is too expensive to operate on low yield routes. Most people here agreed that the routes wouldn't last because of that. In the last year IB has dropped IAD and is strugling in BOS for that same reason. I don't expect then to last long at LAX either. They don't have the equipment to operate thin routes, profitably. They desperately need A330's.
 
incitatus
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RE: Portugal Interested In Selling TAP To LH

Fri Sep 09, 2011 1:49 pm

Quoting airbazar (Reply 48):
But I think one big reason why IB is leaving REC and FOR is because the A343 is too expensive to operate on low yield routes. Most people here agreed that the routes wouldn't last because of that.

I agree that IB's fleet lacks a route-entry aircraft. Besides too expensive, at close to 300 seats in the new config the A340s are too large. But I was hoping MAD-FOR-REC-MAD would stick. At three weekly frequencies IB was taking a small dip in a market where TP has 14 frequencies. The Brazilian economy is going through its best moment, so if not now, never!

I wonder if AF has plans to add destinations in Brazil and whether IB's actions will give them pause for thought.
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