British Airways backs TPG-led Iberia consortium

British Airways, Europe’s third biggest airline, has teamed up with a consortium of four private equity firms led by TPG about a potential bid for Spanish airline Iberia.

London-based British Airways has teamed up with a private equity consortium to explore a bid for Spain’s biggest airline Iberia. The parties in the consortium are US buyout firm TPG, Spanish private equity firms Vista Capital and Quercus Equity and Madrid-based investment firm Ibersuizas.

British Airways said in a statement that it would not make an independent bid for Iberia. The airline has a 10 percent stake in Iberia and first right of refusal on another 30 percent.

It is thought that British Airways is also in cahoots with London-based Apax Partners about a potential bid, and that Apax has the support of Torreal and Inversiones Hemisferio, investment firms owned by Spanish billionaires Juan Abello and Jose Manuel Lara.

TPG was thought to have threatened to abandon its proposed €3.4 billion bid for Iberia after British Airways indicated that it would attempt to bid with both TPG and rival Apax.

TPG was recently defeated in its A$11.1 billion ($9 billion, €6.7 billion) bid for Qantas, Australia’s biggest airline, after it failed to win shareholder approval. However, the buyout firm has been shortlisted as a potential bidder for Italian airline Alitalia.

There has been much consolidation in the airline sector driven by the “open skies” agreement between the US and Europe which permits more budget airlines to fly between the two continents.

TPG has considerable experience in the airline sector. It has previously invested in US airlines Continental and America West and Europe’s biggest low-cost airline Ryanair. Founded in 1992, the firm has more than $30 billion under management with offices in London, Moscow, Mumbai, Shanghai, Singapore, Tokyo and the US.