Portugal has selected Lufthansa Group to take part in the first phase of TAP Air Portugal’s privatisation, opening the way for the German airline group to acquire a stake of up to 49.9% in the country’s national carrier.
The Portuguese government said Lufthansa’s proposal was 16% higher than the competing offer submitted by Air France-KLM. It also cited a “lower degree of uncertainty” as a factor in its decision. The transaction could generate up to €1.2 billion, with the Portuguese state retaining a 50.1% majority stake in TAP.
Prime Minister Luís Montenegro described the selection as the conclusion of the first stage of the privatisation process, highlighting the competitive nature of the procedure, the demanding negotiations and the transparency maintained towards the Portuguese public.
He said the government believed the decision offered the strongest prospects for TAP’s future while protecting Portugal’s national interests. Montenegro also outlined his ambition to expand the airline’s reach, saying the objective was to enable TAP to fly to more destinations and extend its international network.
Government values TAP at €2.6 billion
Montenegro put TAP Air Portugal’s valuation at €2.6 billion, attributing the figure to restructuring measures, management efforts undertaken over the previous two years and the government’s broader strategy for the aviation sector.
The government’s decision also paves the way for closer integration between TAP and Lufthansa Group, which already has a longstanding relationship with the Portuguese airline through Star Alliance.
Carsten Spohr, chairman of the executive board and chief executive of Deutsche Lufthansa AG, welcomed the announcement, describing TAP as a strong, profitable airline and a long-established partner within Star Alliance.
He highlighted the carrier’s international performance, particularly its leading position on South Atlantic routes, as well as its workforce and business model.
Spohr said the agreement would allow TAP to continue developing alongside Lufthansa Group while supporting the German group’s internationalisation strategy and strengthening its position in the South Atlantic market.
He also pointed to Lufthansa’s longstanding ties with Portugal, noting that the group had invested in the country for decades, created and safeguarded highly skilled jobs, and maintained connections between Portugal, Europe and the rest of the world.
The Lufthansa chief executive expressed confidence in a shared future with TAP and in continued constructive cooperation with the government in Lisbon.
Acquisition value could rise to €1.2 billion
Lufthansa Group has disclosed that its initial offer involved a purchase price of €1 billion for a 44.9% stake in TAP Air Portugal. The amount could rise to as much as €1.2 billion if the acquisition reaches 49.9%.
The potential increase reflects two elements: the possible inclusion of up to 5% of shares initially made available to TAP employees, and a ticking fee.
Under the proposed structure, Portugal would retain control of the airline through its 50.1% shareholding, even if Lufthansa acquires the maximum stake currently envisaged.
Transaction documents now being finalised
Following the government’s selection, Lufthansa Group is working with the Portuguese authorities and Parpública, the state-owned holding company and national management vehicle involved in the process, to complete the transaction documentation.
The parties expect to finalise and sign the agreements governing the acquisition shortly. The announcement therefore marks a key step in TAP’s privatisation, although the definitive transaction agreements still need to be completed and signed.
