The Portuguese government is reviving efforts to privatize TAP Air Portugal, aiming to sell up to 49.9% of the national carrier by early 2026. This marks the second attempt in just a few years to offload a stake in the struggling airline, and this time around, the government is hoping one of the European mega-carriers bites.
Portugal Moves Forward With TAP Air Portugal Privatization, But Who Will Buy?
Portugal’s new center-right government is reopening the process with a more “open and flexible” approach, but still wants to maintain majority control, at least for now.
Finance Minister Joaquim Miranda Sarmento said Lisbon is seeking “a strategic partner” with aviation expertise, adding that the aim is not just to raise capital but to “develop TAP” into a more globally competitive airline. No surprise there. (Every airline sale promises “synergies” and “growth,” right up until the layoffs and route cuts begin)
TAP was previously 61% publicly owned, with a 5.9% stake in the hands of workers. The government intends to retain a majority stake, but selling just under 50% still leaves plenty of room for outside influence. All three major European carriers, including Air France-KLM, IAG, and Lufthansa, have shown interest.
A Strategic Fit For Lufthansa Or Air France-KLM?
Lufthansa has long been rumored to be the most likely suitor. TAP’s Lisbon hub offers a strong gateway to Brazil and other Portuguese-speaking markets, a region Lufthansa has been eyeing more aggressively as it expands its global network.
But there’s a wrinkle: Lufthansa is still in the middle of digesting its ITA Airways acquisition in Italy. The ink is barely dry on that deal. Would Lufthansa really jump into another politically sensitive, loss-prone national carrier right now?
My analysis is absolutely yes, if for no other reason than to keep Air France-KLM from acquiring it. Air France-KLM just announced intentions to acquire a majority stake in SAS and would love to have strength in both northern and southern Europe.
Both the Lufthansa Group and Air France-KLM strike me as more than happy to take on the risk of a traditionally troubled flag carrier to keep the other from doing so.
An IAG acquisition appears less likely since there would be a lot of route overlap with Iberia and its hubs in Madrid (MAD) and Barcelona (BCN).
> Read More: Air France-KLM Set To Become Majority Owner Of SAS
A Weak Airline With Strong Geography
TAP may not be a world-class airline by most measures. Its customer service is uneven. Its fleet is modern but limited. Its operations are patchy. But it sits on valuable geographic turf: Lisbon is ideally positioned for transatlantic and African connectivity, and TAP’s long-haul routes to Brazil remain among its strongest assets.
The question is whether that’s enough.
Portugal’s government has tried to prop up the carrier with subsidies and cost-cutting measures in recent years. At one point, the EU approved nearly €3 billion in aid to keep TAP afloat during the pandemic. But time has run out, and Brussels has made it clear: privatization is the path forward.
Even though TAP declared a profit last year, it was only €53 million, a 70% decrease from 2023 record profit of €177 million. Legacy labor costs remain a huge concern for the viability of the carrier.
CONCLUSION
TAP is officially back on the market. Portugal wants to sell nearly half the airline, retain control, and still find a strategic partner willing to invest heavily and expand service. That’s a tough sell, but I expect Air France-KLM, IAG, and Lufthansa all to step forward.
TAP’s long-haul network to Brazil, its Lisbon hub, and its potential integration into a wider alliance make it attractive. Will Star Alliance soon lose another member, or will we see TAP join the widening Star Alliance Atlantic Joint Venture?
image: TAP Air Portugal
I wouldn’t count IAG out. TP focuses on Brazil and IB does the same with Spanish speaking Latin America. Sure, there’s some overlap but LH has managed to acquire 3 bordering airlines plus ITA.
You may not count IAG out but the European Commission will on exactly the same basis as they refused Air Europa, over dominance in the market in this cast both on the Iberian peninsula and services to South America.
I hope it’s AF/KLM if there is a sale, Lufthansa are already over dominant in Europe and dropping standards more every day as a result.
Actually a shrewd move. I can see AF/KL, IAG, and LH Group in a bidding war for TAP. They have done a nice job positioning themselves the past few years and are geographically well located. This could get interesting.
The cards are in AFKL’s hands at the moment. If AFKL decide to not purchase a stake in UX and let TK acquire them, then they’ll go with acquiring a stake in TP.
LH needs to do it more to block AF-KLM than anything else.
“An IAG acquisition appears less likely since there would be a lot of route overlap with Iberia and its hubs in Madrid (MAD) and Barcelona (BCN).”
Where’s the route overlap?
I believe it’s only LIS-BCN, LIS-BIO, LIS-IBZ and LIS-MAD? I don’t see any others. And those routes either have plenty of ULCC competition or it would be easy for Vueling to move off the two routes before an IAG move if they felt overlap was an issue (fun fact. there’s no high speed rail between Lisbon and the two major Spanish cities).
There often seems to be a perception about how much overlap TP and IB have due to being on the same peninsula when, in reality, there’s very little overlap whether dots in South America or even in the Iberian peninsula itself. AMS and CDG are closer than LIS and MAD. I believe it’s only four routes where they overlap from looking at flightconnections.com. And those routes already have ULCC presence or would be rather easy to provide gate access if it’s lacking for Volotea, easyjet, or RyanAir
TP doesn’t fly OPO to MAD or BCN.
And considering the logic of “would LH want to take on TP while they’re absorbing ITA” (though your ultimate point was LH would still want TP). The only European group currently not absorbing a new carrier is IAG. AF/KL is obviously heavily working on bringing SAS into the JV fold.
I have no insider info about whether IAG would want TP or not, but it’s VERY complementary to IB (relative to TP) considering how little IB really does in Brazil and the ongoing alliance fights for GOL. If IAG was able to get TP and AA kept GOL, you’d have an amazing Brazilian network with no competitive issues between the two.
AF/KL have yet to get involved with the DL/LA JV but it doesn’t seem far fetched that they will eventually and an LA-TP tie up would have some serious competitive issues in the future.
Just conjecture early in the morning. Not saying it’s right or wrong.
strangely enough, I believe the only Spanish Speaking destination TP serves in South America is CCS.
IB are showing increasing interest in the Brazilian market, starting FOR and REC in the winter timetable.
Funny you say that. I saw those dots on the flightconnections.com map for IB and had to do a double take.
I’m guessing with the XLR?
Another fun fact.
BRU-FRA
FRA-MUC
MUC-VIE
MUC-ZRH
FRA-ZRH
MUC-MXP
FRA-MXP
All closer geographically to each other than MAD and LIS
There really isn’t much overlap between TP and IB/VY and existing LH hubs have far more overlap between each other from simple geography.
Not trying to belabor the point. Just interesting.
By the way, IAG are working with LATAM. Gol are the strategic partner of AFKL, they’ve even got their logos in the cabin!
You’re absolutely right. I only meant that I’ll be surprised to see that last for another 4 years. I think AF/KL’s bigger goal is to get Air Europa vs TP so that they can then join forces with Delta and LATAM with some degree of connecting feed in Madrid. Delta used to have their logos on GOL aircraft too. 😉
If LH/UA/AC actually wanted TP to join into their TATL JV, wouldn’t they have asked TP to join already? Or is this more a case of TP not wanting to join or not being able to join because of regulations or not meeting the requirements/not wanting to make the adjustments.
LOT also aren’t part of the JV. In an Ideal world, they should be buying TP and forming the fourth major group in European aviation, but I don’t see that happening unfortunately.
Lufthansa and TAP would be the perfect match
Could you elaborate more, if you please ? Or all you just being snarky ?
…lol
Anybody but Lufthansa, we don’t want to see TAP standards fall to LH ones.
Dint forget Turkish Airlines… and the most recent rumours of Ethiad. Current Ethiad’s CEO was already TAP’s.