Portugal, Lisbon – Portugal has opened final negotiations with Air France-KLM and Lufthansa over the proposed sale of a 44.9% stake in TAP Air Portugal, keeping both European airline groups in contention for the state-owned carrier.
The Council of Ministers approved the negotiations on Sept. 4 after reviewing an assessment by PARPÚBLICA, Portugal’s state holding company overseeing the privatization. The government said the two binding offers received similar overall evaluations, allowing both bidders to submit improved proposals.
Two bidders remain in TAP contest
Air France-KLM and Lufthansa advanced to the final stage after submitting binding proposals that met the requirements set out in Portugal’s tender documents.
The government said the bids differed in their details but were closely matched in their overall assessments and aligned with the strategic priorities established for TAP.
Rather than immediately selecting a preferred bidder, Portugal has given both groups an opportunity to strengthen their offers during the next several weeks.
Price and investment plans central to decision
Portugal is seeking to sell up to 49.9% of TAP’s share capital.
A 44.9% stake is intended for a reference investor, while up to 5% is reserved for TAP employees. The selection process considers the financial value of the proposals alongside industrial plans, connectivity commitments and the bidders’ financial capacity.
The structure would allow Portugal to retain a substantial stake while bringing a major European airline group into TAP’s ownership.
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Connectivity remains a key priority
Portugal considers TAP strategically important to the country’s international connectivity.
The privatization criteria emphasize maintaining and expanding connections involving mainland Portugal, the country’s autonomous regions, the Portuguese diaspora and Portuguese-speaking countries.
The government also wants the eventual investor to support growth at Portuguese airports, strengthen TAP’s maintenance and engineering activities, invest in the airline’s fleet and pursue its longer-term development.
Lufthansa and Air France-KLM offer different networks
The final contest places two major European airline groups against each other for a stake in a carrier with an important role in Portugal’s international aviation network.
Lufthansa has an existing presence in Portugal through Lufthansa Technik Portugal, while Air France-KLM brings extensive European and international operations. The government said, however, that both initial industrial plans were broadly comparable and consistent with its strategic objectives.
The final decision will therefore depend on how the improved proposals perform against Portugal’s stated criteria rather than simply on the scale of either airline group.
TAP emerges from restructuring
The privatization follows the completion of TAP’s restructuring program under European state-aid rules.
Portugal announced in June that the European Commission had confirmed completion of the restructuring plan, which followed the airline’s financial difficulties during the COVID-19 pandemic.
The program included operational and financial restructuring and the disposal of non-strategic assets. Its completion provides the backdrop for the government’s renewed effort to reduce its ownership of TAP.
Final decision remains unresolved
The latest government decision does not identify a preferred buyer.
Instead, Air France-KLM and Lufthansa will have several weeks to improve their respective proposals before Portugal evaluates the final offers. The government will then determine which proposal best satisfies its financial and strategic requirements.
Both bidders therefore remain in the race as TAP’s privatization enters its decisive phase.
TAP sale has wider economic significance
The transaction extends beyond a conventional corporate ownership change because of TAP’s role in connecting Portugal with international markets.
The airline operates links between Portugal, Europe, Brazil, other Portuguese-speaking destinations and the country’s autonomous regions. Maintaining those connections is consequently a central consideration in the government’s assessment of potential investors.
The eventual buyer will take a significant position in an airline whose commercial value is closely connected to Portugal’s role as an international aviation gateway.
Competitive final stage begins
Portugal’s decision to negotiate with both remaining bidders preserves competition while giving the government an opportunity to secure stronger terms before completing the sale.
The outcome will depend on the improved combination of price, investment, connectivity and long-term strategy offered by Lufthansa and Air France-KLM. Portugal has not yet selected the buyer.
Reporting Credit: This report is based on information from the Government of Portugal, the Council of Ministers and PARPÚBLICA.
