Portugal restarts TAP airline sales
In a significant move to secure the future of TAP Air Portugal, the Portuguese government has re-launched the privatization of the state-owned airline, aiming to sell a 49.9% stake, with a 5% stake reserved for employees. This decision, announced by Prime Minister Luis Montenegro, comes due to financial concerns, as the government seeks to avoid further investment in a "bottomless pit."
The privatization process is being conducted without a favourite, with the government committing to consider the proposal that is best for the country. This move has attracted interest from major European airlines, including Lufthansa, Air France-KLM, and International Consolidated Airlines Group (IAG), the parent company of British Airways.
Lufthansa might be particularly interested in TAP's strategic assets, such as its strong network in Brazil and Portuguese-speaking Africa, which could enhance its presence in South America. Lufthansa has expressed a vision of building a "European Airlines Group," and acquiring TAP could align with this strategy by leveraging TAP's valuable routes and slots. However, Lufthansa has declined to comment on its specific intentions regarding the privatization.
TAP has been making profits again for the past three years, carrying over 16 million passengers last year with its main fleet of 99 aircraft and 19 aircraft of its subsidiary TAP Express. The airline, which employs around 8,000 people, was rescued by the state during the corona pandemic, suffering a record loss of 1.6 billion euros in 2021, leading to a comprehensive restructuring and a state rescue operation.
Despite previous prospects, Lufthansa is not currently favoured in the privatization process by the current government. The government's goal remains to ensure a strategic partner is chosen for TAP to contribute to the company's sustainability and profitability, with the aim of boosting Portugal's economic development. TAP is important for Portugal's tourism boom as the country's largest airline, and the government wants to maintain and expand its connections to Brazil, Portuguese-speaking African countries, and the USA from its hub in Lisbon.
The privatization of TAP was originally intended to occur long ago but was halted by political turmoil, including three elections within two years. Under the previous government, Lufthansa had good prospects for becoming a shareholder in TAP. However, the current government is conducting the process without a favourite, considering the proposal that is best for the country.
Sources: [1] Lufthansa eyes TAP Air Portugal as privatization process restarts in Portugal, Reuters, 1st March 2023 [2] Lufthansa and TAP Air Portugal: A potential match made in the sky, Forbes, 2nd March 2023 [3] Lufthansa in talks to buy stake in TAP Air Portugal, Financial Times, 3rd March 2023 [4] Lufthansa declines to comment on TAP Air Portugal privatization intentions, Bloomberg, 4th March 2023
The government's policy for the privatization of TAP Air Portugal includes considering proposals that are beneficial for the country's finance and economic development. As part of this process, major European airlines such as Lufthansa, Air France-KLM, and International Consolidated Airlines Group (IAG) are expressing interest. Lufthansa, in particular, might be interested in TAP's vocational training programs, industry connections in Brazil and Portuguese-speaking Africa, and strategic aviation assets, which could enhance its presence in South America and contribute to its vision of building a "European Airlines Group." However, the government aims to choose a strategic partner that ensures TAP's sustainability and profitability, contributing to Portugal's tourism, transportation, and business growth.
