IAG's interest in TAP weakening: Walsh

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Recent consolidation in the airline industry has cooled International Airlines Group's interest in the possible privatisation of TAP Portugal.

IAG chief Willie Walsh says its interest in TAP is "significantly less" now than a year ago.

Over the last year IAG has been among the companies linked with possible interest in a stake in the carrier. Portugal's government has been widely expected to put TAP Portugal up for sale as part of the state's fund-raising efforts, though a formal privatisation process is still to begin.

Walsh had already dampened expectations late last year by stressing IAG was not "chasing" TAP and noting no sale process had been launched. Speaking today during a first-quarter conference call, he noted the fast-evolving market conditions and consolidation over the last year were impacting its potential interest in the carrier.

"I believe a number of airlines that may have appeared attractive some years ago are becoming less and less attractive because of the way industry is changing, and I would include TAP in that," he says.

"Our interest in TAP largely related to the network it had in Brazil, but things are developing - the merger of [Oneworld partner] LAN and [Brazil's] TAM, our acquisition of slots through BMI at Heathrow gives us opportunities that look more interesting to us. So our interest in TAP is significantly less today than it would have been 12 months ago."

Walsh adds he expects the difficult market conditions to lead to more consolidation, further changing the landscape within the industry.

"I have argued for some time we are at a very interesting crossroads," he says. "I personally believe the future is going to be much brighter for the airline industry. I think we will see quite a lot of change this year. I think the high oil price and the impact that is having on profitability will drive weaker airlines out of business."

He believes this will have a positive impact for the wider health of the industry and sees encouragement from airline behaviour today.

"I think the fact the industry has demonstrated so much discipline in relation to capacity tells you that it is different today than we have seen before, and that points to me to a much more rationale future and one where the industry can generate the sort of profits that you would expect from us," Walsh says.