Key Points:

  • The Portuguese government aims to sell at least 51% of TAP to further the national aviation sector.

  • Lufthansa, Air France-KLM, and IAG have shown significant interest in the airline’s privatization.

  • TAP’s strong routes to South America, especially to Portuguese-speaking countries, present a unique value.

Portugal to Sell Majority Stake in State-Owned TAP Airline

LISBON — Finance Minister Fernando Medina of Portugal revealed plans to sell a minimum of 51% of the national airline, TAP, to bolster the domestic aviation industry. This has piqued the interest of some of Europe's major aviation groups, including Lufthansa, Air France-KLM, and IAG, the conglomerate behind British Airways and Iberia.

Air France-KLM, through a representative, declared a "strong interest in the privatization of TAP," while awaiting further particulars. Similarly, while attending the World Aviation Festival in Lisbon, IAG's CEO, Luis Gallego, stated his optimism regarding the acquisition, noting, “We need to assess the process, but TAP has the potential to be a significant addition to IAG.”

The German airline Lufthansa also sees potential synergy, highlighting the lucrative prospects of TAP's extensive network of South American routes. Such connections are especially enticing, considering projections from market analytics firm Statista. They forecast the flight market in South America to surge from nearly €23 thousand million this year to €26.8 thousand million by 2027. TAP's unique routes, particularly to Portuguese-speaking nations like Brazil, play a pivotal role in these projections.

TAP's history has been marked by fluctuating ownership, oscillating between the public and private sectors. After its most recent nationalization in 2020, the state controlled 72.5% of TAP, valuing it at €244.4 million. However, 2021 saw the airline reverse a four-year loss trend, reporting a profit of €65.6 million. A continuation of this positive trajectory is anticipated for the current year.

The exact proportion of the airline to remain under state control is still under discussion. Nevertheless, Medina emphasized that the government is on track to finalize the terms for TAP's privatization by year-end, with hopes to conclude the entire process by mid-2024.