Air France-KLM has signalled interest in taking part in the privatisation of TAP Air Portugal, with sources telling Reuters that the airline is open to various options, including purchasing a minority stake in the Portuguese carrier.
Lisbon is currently gathering information to develop a privatisation plan for TAP, and finalising consultations with potential buyers, which also include German carrier Lufthansa and British Airways owner IAG. Prime Minister Luis Montenegro’s minority government reversed course last month, signalling that it was open to a partial not full privatisation. The change may be a response to political realities: the main opposition Socialists in parliament, which must approve the privatisation plan, have promised to vote against the sale of a majority stake.
Those vying for a stake in TAP are keen to access its biggest assets: its connections to Brazil and Portuguese-speaking African countries, as well as to the US via its Lisbon hub.
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TAP Portugal has gone through many cycles of privatisation and nationalisation in its history, with the most recent shift to complete government ownership spurred by Covid-19’s devastation of the airline industry. A 50-percent stake jumped to around 72.5 percent in 2020 before the company became wholly state-owned in December 2021, following approval from the European Commission for Portugal to issue 2.55 billion euros (US$2.72 billion) in restructuring aid to the floundering airline.
More recently, TAP has seen considerable recovery, posting a record profit of 177.3 million euros in 2023, more than double the 65.6 million euros recorded the previous year. This turnaround, as well as its connections, are what make the airline so attractive. In October, Lufthansa CEO Carsten Spohr met with the Portuguese government to formally signal his company’s interest.
A source told Reuters that Lufthansa was eyeing a 19.9-percent stake, just below the 20-percent threshold that requires approval from the European Commission. Air France took the same approach with its acquisition of a stake in Scandinavian airline SAS, securing 19.9 percent. The European Commission remains concerned about the dominance of Europe’s three largest aviation groups and is averse to mergers, despite airlines’ claims that consolidation is necessary to cope with soaring operating costs.
