Air France-KLM and Lufthansa have submitted their final improved bids for a 44.9% stake in TAP Air Portugal, bringing the Portuguese airline's partial privatization process closer to a decision.
The two European airline groups delivered their binding offers to state holding company Parpública on September 30. The proposals will now be evaluated before the Portuguese government selects the preferred investor, a decision expected by mid-October.
According to Portuguese newspaper Jornal Económico, the improved offers exceed €1 billion (approximately US$1.17 billion) for the 44.9% stake. That would imply a valuation of more than €2 billion (US$2.34 billion) for the entire airline, although the precise amounts offered by each group have not been disclosed.
Portugal is not selling control of TAP at this stage. The government plans to retain 50.1%, while 5% has been reserved for employees. Any shares not acquired by employees could subsequently be purchased by the selected strategic investor.
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IAG, parent company of British Airways and Iberia, had initially qualified to participate in the process alongside Air France-KLM and Lufthansa, but withdrew before submitting a non-binding proposal, leaving the two groups as the final contenders.
Air France-KLM proposes southern European hub
Air France-KLM has provided more details about its plans for TAP, describing Lisbon as a potential southern European hub within its network.
The group said its proposal would preserve TAP's Portuguese identity and brand while developing Lisbon as its only hub in southern Europe. Its plans also cover cargo, maintenance, loyalty programs and further development of operations in Porto and other Portuguese cities.
Delta Air Lines and the SkyTeam alliance have publicly supported the Air France-KLM proposal. The Franco-Dutch group also sees opportunities to expand connectivity between Portugal and North America through its existing transatlantic partnerships.
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TAP's position in Brazil and other South American markets is another important element of the acquisition. The Portuguese carrier operates an extensive network between Europe and Brazil, a market in which both competing groups already have significant operations.
Air France-KLM and Lufthansa have also reportedly left open the possibility of a future share exchange if Portugal decides to sell another portion of TAP after the initial transaction.
Lufthansa points to multi-airline model
Lufthansa has disclosed fewer details about its final offer but has emphasized its experience operating several network airlines while retaining their individual brands and hubs.
The Lufthansa Group currently includes Lufthansa, SWISS, Austrian Airlines and Brussels Airlines, while ITA Airways has also joined the group following Lufthansa's acquisition of a stake in the Italian carrier.
The German company has previously highlighted TAP's position in the South Atlantic market and its extensive Brazilian network as important elements of its interest in the Portuguese airline.
The acquisition would also expand the geographical reach of either group. Air France-KLM already operates major hubs in Paris and Amsterdam, while Lufthansa Group's network includes Frankfurt, Munich, Zurich, Vienna, Brussels and Rome.
Decision expected within weeks
The latest bids follow several stages of a privatization process that initially attracted all three of Europe's largest airline groups.
Portugal relaunched the sale after TAP returned to profitability following its restructuring and state-backed rescue during the Covid-19 pandemic. The government has sought an industrial partner capable of supporting the airline's growth while maintaining its hub in Lisbon and strategic connections with Portuguese-speaking markets.
Parpública will now analyze the two final offers and submit its assessment to the government.
Infrastructure Minister Miguel Pinto Luz said Portugal expects to make its decision around the middle of October. Completion of the transaction will subsequently require additional formal procedures and regulatory approvals, with the selected airline group expected to enter TAP's capital in 2027.
