Air France and Lufthansa lodge bids for TAP Air Portugal

Air France-KLM has submitted an offer to buy a minimum 44.9% stake in TAP Air Portugal with its bid backed by joint-venture partner and shareholder Delta Air Lines, which owns a near 50% share of Virgin Atlantic.

 

However, rival Lufthansa has also announced a bid for an unspecified minority stake in TAP.

 

Portuguese state holding company Parpública has been seeking investment through a part-privatisation of TAP for some time, seeking to sell a 44.9% stake, with a further 5% to be held on behalf of TAP employees, leaving the state with a controlling share.

 

Air France-KLM confirmed a binding offer to acquire a 44.9% to 49.9% stake ahead of reporting results for the six months to June on Thursday (July 30), saying it “would position Lisbon as its unique Southern European hub . . . expanding connectivity to key markets particularly in the Americas and Africa” if successful.

 

The group included plans to develop new aircraft maintenance, repair and overhaul (MRO) facilities “dedicated to the maintenance of latest generation aircraft and engines” in Portugal as part of its offer

 

Chief executive Ben Smith said: “Our teams have worked closely with Portuguese stakeholders for the past three years to come up with our strongest proposal for TAP. 

 

“What we’ve submitted is not just a proposed price for an airline. It is a strategic, extensive and comprehensive long-term plan for TAP and for Portugal.”

 

He insisted: “Our goal is to ensure long-term growth for TAP, not only in Lisbon but also in Porto and other cities in Portugal, and to do so sustainably.”

 

Smith also held out the prospect of codeshare and loyalty benefits from an agreement with Delta Air Lines.

 

Air France-KLM said its offer fully complied with the Portuguese government’s requirements to “maintain and nurture” TAP’s assets, including its management, brand, network, headquarters in Portugal and Lisbon hub.

 

Lufthansa Group confirmed it had also bid for “an initial minority stake” in TAP which is a member of the Lufthansa-led Star Alliance of carriers.

 

Chief executive Carsten Spohr said: “The Lufthansa Group stands for a long-standing, trusted and strategic partnership with Portugal. 

 

“We have been investing in Portugal for decades and connecting the country with Europe. Our interest in taking a stake in our Star Alliance partner TAP is the next logical step. 

 

“We want to strengthen Portugal’s national airline as part of the Lufthansa Group and as the leading airline for the South Atlantic, with Lisbon as a strategic hub.”

 

Lufthansa is due to open a new Lufthansa Technik facility to repair engine parts and aircraft components in Santa Maria da Feira near Porto in 2030. 

 

The group, which comprises Swiss, Austrian Airlines, Brussels Airlines and Lufthansa, confirmed it would take a 90% stake in Italian carrier ITA Airways, successor to Alitalia, in May after acquiring a minority stake last year.

 

Lufthansa and Air France-KLM have been competing to acquire a stake in TAP since the Portuguese government re-launched a long-delayed privatisation in July last year. 

 

Rival International Airlines Group, parent of British Airways, also initially expressed interest in acquiring a share but withdrew from the bidding process at the start of April.

 

IAG would have faced considerable difficulty in convincing regulators to sanction a takeover given it already owns Iberia and Barcelona-based Vueling in neighbouring Spain.

 

The group withdrew from a second attempt to buy a majority stake in Spanish carrier Air Europa in 2024 due to the European Commission’s competition concerns.