TAP Air Portugal turns the corner in the consolidation movement of European airline groups

After the entry of the Air France-KLM group into the company that will take over the Scandinavian SAS, the Portuguese carrier is the most desired asset on the segment

The era of flag airlines in Europe is nearing an end. Or becoming insignificant in the market. Faced with fierce competition from low-cost airlines, traditional carriers have embarked on a consolidation movement unparalleled in history.

The formation of groups such as IAG, Air France-KLM and Lufthansa have shown the path to survival, in which it is necessary to gain scale to contain the appetite of newcomers and their lean costs.

Last week, yet another traditional airline capitulated. Founded in 1946, the Scandinavian SAS accepted a proposal to be taken over by a consortium in which Air France-KLM stands out.

Still in 2023, another survivor, ITA Airways (formed with the Alitalia estate) had the purchase of a large part of its shares by Lufthansa approved.

SAS E195 (Anna Zvereva)

The hot topic now is TAP, Portugal’s largest airline, which is controlled by the state after a failed privatization.

The dispute for TAP is expected to take place in 2024, when the Portuguese government intends to bid for it with the goal of selling at least 51% of its capital.

Among the suitors are Lufthansa, IAG (British Airways, Iberia and others) and Air France-KLM, whose spokesperson stated last week that TAP is an asset of interest.

The condition for taking the Portuguese carrier is to reinforce the Lisbon hub and improve the connectivity of other airports such as Porto, in the north of the country.

It is also necessary that TAP is preserved and not absorbed by some big brand. The Portuguese government wants a renowned airline for this and not adventurers.

ITA Airways first A320neo (ITA)

Bid in 2024

Due to its geographic proximity, IAG would be a good candidate but possible internal competition with the Spanish companies Iberia and Air Europa could weigh against it.

Lufthansa, in turn, is a partner of TAP within the Star Alliance and taking it over would mean a big step in the Iberian market and in South America, where the Portuguese company has a large network to Brazil.

Air France-KLM’s asset is maintaining a certain independence among its partners, meeting Portugal’s wishes.

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It is worth remembering that the conditions of the TAP bid will only be fully known at the beginning of 2024 and the auction tends to take place in the middle of next year.

Until then, other groups, including non-Europeans, may show an appetite for taking on one of the last independent carriers on the continent.


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