The Portuguese government has made public its red lines for TAP airlines’ privatisation, namely that Lisbon remain a hub airport for the carrier, protecting TAP Air Portugal as a cultural and economic asset for the country, Reuters has reported.
Joao Galamba, Infrastructure Minister, told a parliamentary committee on Wednesday that the “core goals” guiding TAP’s sale would mean the country “will not give up keeping the Lisbon hub, safeguarding the company’s strategic value, which is its Portuguese identity and, hopefully, the increase of its contribution to the economy.”
Once these core goals are guaranteed, the government will seek to maximize revenue from the sale, but maximizing revenue in itself is not the central objective.Joao Galamba, Infrastructure Minister of Portugal
As well as being a key plank in Portugal’s tourism industry, flying in the majority of visitors to the country, TAP buys more than a billion euros of Portuguese goods and services each year. Approximately 1,200 Portuguese companies benefit from this huge yearly outlay by the nationally-owned airline.
This means Portugal will likely aim to maintain a stake in TAP. The country’s State Secretary for Finance João Nuno Mendes announced on 2 June the state intends to keep a majority stake. However big the eventual stake, part retention of control is clearly more important to the government than sale price.
Independent advisors are currently evaluating the carrier’s worth and, after a lengthy saga of delays and twists, the privatisation is now slated for July.
The privatisation terms will be crafted to make the most of any bidding war, “maximising competition”, said Galamba. He highlighted the positive trajectory the company has been on. After relying on a Brussels bailout during the pandemic, this year TAP halved its Q1 losses to 57.4 million euros.
TAP provides a strategic “in” for carriers looking towards South America, being in second place behind Brazil’s flagship airline LATAM Brasil for share of international flyers. With TAP’s passenger numbers continuing to soar, overtaking pre-pandemic levels, it is now “a sustainable and viable company”, Galamba said.
Interested parties holding their cards close to their chests include Air France-KLM, British Airways-owner International Consolidated Airlines Group and Lufthansa, which recently acquired a 41% share in Italy’s ITA Airways. During Istanbul’s International Air Transport Association General Meeting earlier this month, Lufthansa CEO Carsten Spohr said it was too early to talk about a Lufthansa deal.