The latest installment in TAP Air Portugal’s storied privatisation is here. The government has announced it is to sell at least 51% of the business – a controlling stake – while TAP employees will receive another 5%. The holding the State will retain is to be decided, Reuters has reported.
How much capital the Portuguese state was prepared to give up has been an ongoing source of uncertainty during the longwinded rollercoaster of TAP’s sale. Earlier this summer only, the State had said it intended to keep a majority stake in the airline, so the news that it will let its controlling stake go is a potential breakthrough.
Approval from cabinet came on the understanding the sale would benefit the country’s air industry as a whole, especially in terms of hub development, jobs, national airport operations and revenue.
Now slated for mid-2024
Following a Brussels bailout and restructuring, TAP made a 23-million-euro ($24.3 million) net profit in the first half of this year – a colossal difference from the previous year’s 202 million euro loss.
The exact conditions of sale are still to be confirmed but its terms and requirements should be available by the end of 2023. The now oft-postponed sale should conclude by mid-2024, Finance Minister Fernando Medina said.
Medina told journalists that objectives for TAP growth include “national hub growth, growth and employment within the aviation sector, better utilisation of national airports and pricing.”
Bigging up the offering, he pointed out TAP’s “privileged connections” to the Portuguese-speaking world, including Angola, Brazil and Mozambique.
The ups and downs of TAP’s privatisation have been in the press for a long time, throughout most of which Air France-KLM, IAG, and Lufthansa have been in the interested parties.
Lufthansa is known to be interested in the Portuguese carrier as a route into the South American market and this was confirmed by a spokesperson, who highlighted that Lufthansa is always seeking to consolidate its position.
IAG’s CEO Luis Gallego said even before the government’s latest announcement that IAG still considers TAP a good match for its profile. That’s a view shared by Ryanair DAC’s CEO, Eddie Wilson. At the World Aviation Festival in Lisbon, he observed to Reuters that TAP is “a natural fit for IAG”.
Portugal’s longterm concern meanwhile has been to ensure its own marketplace and existing infrastructure is not disadvantaged by the sale and this was reiterated by Medina on Thursday. “Sector players with relevant scale” are what the government is looking for, he said, rather than “investors of a strictly financial nature.”
Wilson sees IAG as the candidate most likely to meet the Portuguese criteria saying it “would be more likely to develop Lisbon’s hub as opposed to “Air France-KLM and Lufthansa, whose natural instinct is always to draw traffic into their hubs.”