European airline giants circle TAP Air Portugal

Air France-KLM and Lufthansa Group are reportedly vying to take a stake in TAP Air Portugal.

The two European airline groups are seeking to acquire a minority stake in the Portuguese flag carrier as part of a privatisation plan with British Airways owner IAG opting out of the running.

Air France-KLM sees Lisbon’s geographic position as being ideal for becoming a southern European hub, offering transatlantic connectivity to South America.

Lufthansa also confirmed to Reuters that it had also submitted an offer but the value of both proposals remain undisclosed.

Portugal re-launched a long-delayed privatisation of TAP last July, aiming to sell a 44.9% stake to ​a strategic airline partner able to expand the carrier’s global reach and competitiveness, with a ​further 5% earmarked for employees.    

Air France-KLM chief executive Benjamin Smith said: “We value what TAP has built over the last 81 years: a strong Lisbon hub, a strong brand, and a unique value proposition that provides connectivity and pride to millions of Portuguese people.

“We firmly believe that the next chapter of the airline’s history should be written as part of the Air France-KLM Group, building on this legacy and taking TAP to the next level.”

He described TAP as being a “natural fit” within Air France-KLM’s multi-hub strategy, “and our ambition is to strengthen the operations at Lisbon while developing connectivity in other cities across the country including Porto”.

TAP would benefit from its integration into a worldwide commercial organisation, covering Air France, KLM and Transavia, as well as close engagement with transatlantic joint venture partners Delta Air Lines and Virgin Atlantic.

“As TAP and Air France-KLM operate largely complementary networks, Portugal as a whole would enjoy increased air connectivity,” the group claimed.

“Air France-KLM has a strong track record in nurturing and growing historic brands and aims to allow the airline to stay true to its Portuguese heritage while leveraging that distinctive identity on the global stage. 

“This would reinforce TAP’s sustainable growth and regional development, while also safeguarding the connectivity for Portuguese diaspora, in line with the requirements set forth by the Portuguese government.”

Lufthansa chief executive Carsten Spohr said in November his group would be TAP’s "best partner," and a tie-up would bolster Lisbon’s role as an ​Atlantic hub linking the Americas and Africa.

The privatisation process is expected to be completed in the second half of the year.