Portugal selects Lufthansa’s bid for TAP

The Portuguese government has selected Lufthansa’s bid for a stake in TAP Air Portugal ahead of the Air France-KLM Group.

The government said it had selected Lufthansa’s bid for a minority stake as part of the privatisation of TAP due to Lufthansa’s higher offer, which is reportedly 16% up on the Air France-KLM bid, and less uncertainty.

Lufthansa Group has offered a purchase price of €1bn for a 44.9% stake, but this amount could increase to up to €1.2bn for the acquisition of a 49.9% stake.

The deal also includes a proposal for the acquisition of a majority stake in TAP, under a possible second phase divestment.

Lufthansa said it would support TAP’s growth while preserving its national identity and strengthening Portugal’s connectivity, particularly with North and Latin America.

Carsten Spohr, chairman of the executive board and chief executive of Deutsche Lufthansa, said: “TAP Air Portugal is a strong and profitable airline, our long-standing partner in Star Alliance and internationally successful as a leading carrier on South Atlantic routes.

“This allows us to consistently pursue our internationalisation strategy and sustainably strengthen our position in the South Atlantic market. Our company has enjoyed a close and trusted partnership with Portugal for many years.”

Cargo impact

In terms of cargo, the deal will allow Lufthansa Cargo to expand its offering between Europe and South America – in particular Brazil – and Africa from TAP’s Lisbon and Porto hubs.

The airline currently serves 14 destinations to Brazil and is considered the leading European carrier for the country.

Meanwhile, TAP will gain access to Lufthansa’s strong network heading east and its fleet of freighters, allowing it to expand the types of cargo it can carry.

Digital systems will, however, need to be aligned as both utilise different platforms.

As part of the deal, one of the last European airline privatisation projects, 5% of shares will be reserved for employees.

Lufthansa will appoint three executive directors. The government will retain five of the nine board of directors, including the chairman.

The transaction is expected to close at the beginning of 2028.

Lufthansa has also committed to expanding TAP’s fleet to 117 aircraft by 2035 and 130 aircraft after 2035. It currently stands at around 100 aircraft.