Lufthansa and Air France -KLM have been the main candidates for the takeover of Portuguese airline TAP Air since the government announced its privatisation last year.
While in March, Lufthansa was restating its interest in acquiring TAP Air, during the International Air Transport Association General Meeting in Istanbul, the group’s CEO Carsten Spohr said it is too early to talk about a takeover by Lufthansa, as the government has not yet set the final details of the privatisation process.
There’s still discussion in Portugal how that privatisation will take place and it’s not supposed to be 100% privatisation.
Carsten Spohr, Lufthansa Group CEO
One of the points that has yet to be established is how much capital the Portuguese government is willing to give up. The country’s State Secretary for Finance João Nuno Mendes announced on 2 June the state intends to keep a majority stake in the airline, so the privatisation will only be partial.
On the other hand, the group recently acquired ITA Airways under similar conditions. Reaching an agreement with the Italian Ministry of Economy and Finance (MEF) to acquire a minority stake in the Italian national carrier, Lufthansa obtained a 41% stake for €325 million through a capital increase, making ITA the fifth network carrier in the group.
In February, Air France-KLM Group’s CEO Ben Smith also re-stated the group’s interest in aquiring TAP Air Portugal, telling reporters the airline’s well-established hold in the Brazilian market was a key part of the attraction. Brazil’s air industry has bounced back quickly post-pandemic and returned to 82% of pre-Covid-19 traffic across 2022, with 97.85 million passengers. 15.62 million of those were international, and TAP Air Portugal carried 10%, just behind number one carrier, Brazil’s flagship airline LATAM Brasil. With more than 10 flights to Brazilian destinations already in operation from Lisbon (LIS), TAP offers an off-the-shelf solution for Air France-KLM to increase its current offering of just three Brazilian airports – São Paulo, Rio de Janeiro and Fortaleza. A fourth routine flight to Belém will be added in May.
The International Airlines Group (IAG), the Anglo-Spanish aviation group which owns British Airways and Iberia, was the last to express interest in acquiring TAP. In November last year, IAG revealed the group was considering both the purchase of EasyJet and TAP. “We are a platform for consolidation. We will only do what makes sense, but we see that there are opportunities to be stronger. We are a group that wants to consolidate the industry”, said the group’s CEO, Luis Gallego, quoted by The Times.
