They tried and failed to create a low cost carrier. They were quite early in the wave actually, but it was not even a half hearted attempt. Like BA's attempt at an LCC it failed miserably. Main issues were that they went in with their legacy cost structure, and mainly tried to use capacity from the mainline fleet that was idle on weekends.

But yes, IAG has managed to be a major player in the Iberian low cost market, and have Heathrow protect their direct routes, but has taken a thorough beating in Gatters. Similarly, Lufthansa has been well protected in Frankfurt, and had the cash flow to eventually make something of Eurowings, a position SK never had.