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Portugal has relaunched the privatisation of its flagship airline TAP, saying it wants to sell 49.9 per cent of the business in a move that opens the way for a potential bidding war.
The announcement from Prime Minister Luís Montenegro on Thursday restarts a long-delayed process that had previously attracted interest from Europe’s three big airline groups: IAG, Air France-KLM and Lufthansa.
Montenegro, a centre-right leader who began a new term in June, said he was “convinced that there will be many interested parties” drawn to the airline, which serves 86 destinations in 31 countries
TAP offers particularly strong links to Brazil and the lucrative South American market, as well as a way into Africa through routes to Portuguese-speaking Angola and Mozambique.
But the privatisation plan, which includes reserving 5 per cent of the 49.9 per cent for employees, is less radical than earlier versions, which contemplated selling up to 100 per cent of the company.
The privatisation was first initiated by the centre-left government of António Costa in 2023, when financial advisers valued TAP at between €800mn and €1.1bn. The process was halted when Costa resigned over corruption allegations against government officials.
It restarted when Montenegro took power in 2024 but was suspended again earlier this year when he became embroiled in an ethics scandal that forced him to call an election.
Montenegro stressed that “if the objectives set by the government are not met, the privatisation will be suspended”. Those objectives include maintaining Lisbon’s status as a hub airport.
The possibility of TAP being acquired by IAG, which owns Spanish airline Iberia, had prompted worries in Portugal that Lisbon would be downgraded to a spoke airport serving Madrid.
TAP was last privatised in 2015 but the collapse of air travel during the pandemic brought it to the brink of failure.
The government chose to save it in June 2020 via a nationalisation plan approved by the European Commission. The rescue aid totalled €3.2bn of loans and loan guarantees, and led to a forced restructuring.
After posting a record €1.6bn loss in 2021, TAP returned to profit the following year and had record earnings of €177mn in 2023. It made €54mn last year.
IAG, Air France-KLM and Lufthansa have each said they are looking for acquisitions. This month, Air France-KLM increased its stake in Scandinavian Airlines from 19.9 to 60.5 per cent.
Ben Smith, chief executive of Air France-KLM, told the Financial Times last week that the SAS deal did “not at all” affect the company’s ambitions to acquire TAP.
Additional reporting by Carmen Muela in Madrid and Ian Johnston in Paris
