In a decisive move for European aviation, the Government of Portugal has selected the German group Lufthansa as the new strategic partner to lead the operational management of TAP Air, beating out the competing bid from Air France-KLM.
Following Wednesday’s Council of Ministers meeting, Portuguese Prime Minister Luís Montenegro announced the conclusion of the first phase of the flag carrier’s reprivatization process. The initial transaction will inject €1.201 billion into public coffers, while the Portuguese State will retain a 50.1% majority stake, leaving Lufthansa in charge of the airline’s executive and operational management.
A Superior Financial Offer and Lower Uncertainty
According to the Portuguese head of government, the evaluation of the bids submitted in late September favored Lufthansa over the Franco-Dutch consortium Air France-KLM. The German bid exceeded its rival’s financial offer by 16% and, as Montenegro emphasized, presents a lower level of uncertainty for the future of the national carrier.
The proposal sets the airline’s total enterprise valuation at €2.552 billion, a figure that significantly exceeds independent valuations conducted in recent months and years.
The Executive stressed that this process was carried out under strict competitive conditions, rigorous negotiations, and full transparency toward Portuguese citizens, marking the beginning of an ambitious strategy for the country’s aviation sector and airport infrastructure.
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Fleet and Expansion Plan
Infrastructure and Housing Minister Miguel Pinto Luz detailed the strategic commitments made under the winning bid, highlighting a clear roadmap for TAP’s operational modernization and expansion:
- Fleet Growth: The carrier projects reaching an operational fleet of 117 aircraft by 2035, with the objective of expanding to 130 aircraft after 2035.
- Airbus A350 Induction: The proposal includes the transfer of up to eight Airbus A350-900 aircraft into TAP’s fleet starting in 2030, bolstering its long-haul network.
- Airport Infrastructure: The plan allocates investments to Francisco Sá Carneiro Airport (OPO), designated as the strategic hub for the entire operation, alongside upgrades at Faro Airport (FAO) and terminal facilities across the autonomous regions.
€500 Million Capital Injection and Job Creation
Beyond flight operations, the partnership outlines an integrated €500 million industrial and educational investment program in Portugal, featuring:
- The establishment of a new pilot flight academy in Tancos.
- The development of an innovation center in Aveiro.
- The setup of a corporate shared services center.
- The continuation of previously announced projects through the group’s maintenance and engineering subsidiary, Lufthansa Technik, in Santa Maria da Feira.
On the labor front, Luís Montenegro noted that the economic impact will translate into 3,000 direct jobs linked to TAP’s projected growth, totaling 5,500 direct and indirect jobs generated nationwide across all these initiatives.
Shareholding Structure and Financial Landscape
The privatization framework coordinated through Parpública—the state holding management entity—stipulates an initial sale of a 44.9% equity stake to Lufthansa, while reserving a 5% stake for the airline’s employees.
However, under the privatization decree-law enacted in August, Lufthansa will be eligible to purchase any unsubscribed employee shares, ensuring that the remaining 50.1% majority control stays with the State.
The transaction comes amid a challenging financial backdrop for the carrier. TAP posted a net loss of €99.2 million in the first half of 2026, marking a 40% downturn compared to the prior-year period.
Next Steps: Regulatory Scrutiny and Timeline
Final closing will not be immediate. Finance Minister Joaquim Miranda Sarmento warned that the reprivatization process will take between 18 and 24 months to complete, aiming for a final wrap-up by 2028. The deal remains subject to formal scrutiny and regulatory antitrust clearance from the European Commission’s Directorate-General for Competition (DG COMP).
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