Lufthansa Group and the Portuguese government signed the agreement for the German company to acquire 44.9% of TAP Air Portugal on Tuesday, formally moving the €1.025 billion (US$1.15 billion) transaction into its regulatory phase nearly three weeks after Portugal selected Lufthansa over Air France-KLM.
The agreement was signed in Lisbon in a ceremony attended by Lufthansa Group CEO Carsten Spohr and Portuguese Prime Minister Luís Montenegro. Completion remains subject to approvals in the jurisdictions where the two airline groups operate, particularly from the European Commission.
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Portuguese officials expect the transaction to close by early 2028. Business newspaper ECO reported that Lufthansa expects the European Commission’s assessment to be completed during the first half of that year.
Regulatory remedies fall on Lufthansa
Any remedies imposed by European competition authorities will be borne by Lufthansa rather than the Portuguese government. The European Commission is expected to examine competition between the two groups on a route-by-route basis.
The contract also gives Lufthansa the right to abandon the acquisition if the remedies required by regulators undermine the economic rationale of the transaction.
Until regulatory approval is obtained, TAP will continue to be managed independently. Lufthansa will be able to monitor the airline under provisions established in the agreement, but integration can only begin after the transaction closes.
That process is expected to take another 12 to 18 months. If regulatory approval arrives during the first half of 2028, the integration could therefore extend into 2029 or 2030.
Five-year restriction on sale of stake
The agreement prevents Lufthansa from selling its TAP shares for five years. If it decides to sell after that period, the Portuguese government will have a right of first refusal.
Lufthansa, in turn, will have a right of first refusal if Portugal decides to sell its remaining 50.1% stake, potentially opening the way for the German group to take control of TAP in a later transaction.
Portugal selected Lufthansa on October 14 after a final contest with Air France-KLM. As Air Data News reported at the time, the transaction could reach €1.2 billion and Lufthansa also submitted a proposal for a potential second stage in which it could acquire control of TAP.
The Portuguese government will retain five of the nine seats on TAP’s board, including the chairman. Lufthansa will appoint three executives, including the CEO, while another executive will be appointed by the state.
Decisions involving strategy, fleet and high-value operations will require agreement between the two shareholders. The contract also reserves decisions involving TAP’s Lisbon hub, brand and headquarters to the shareholders’ meeting.
