In a significant development within the European aviation industry, Deutsche Lufthansa AG is reportedly poised to acquire a 19.9% stake in Portugal’s state-owned airline, TAP SA, as part of its ongoing privatization. According to the Italian newspaper Corriere della Sera, citing anonymous Portuguese institutional sources, the German airline’s bid could be valued between €180 million ($199 million) and €200 million. This strategic move is expected to take place no earlier than the first quarter of 2025, pending the finalization of Portugal’s privatization terms.
TAP, headquartered in Lisbon, has long been recognized for its strong market presence in transatlantic flights, particularly between Europe and Brazil. As the largest European carrier operating to Brazil, TAP’s extensive network and established brand make it an attractive acquisition target for major European airlines. Lufthansa’s interest in TAP is indicative of the airline’s broader strategy to strengthen its position in key international markets.
Lufthansa’s decision to seek a 19.9% stake in TAP is a calculated one, designed to avoid crossing the 20% threshold that typically triggers regulatory scrutiny and a change of control. By acquiring a minority stake, Lufthansa can gain a foothold in TAP without assuming full control, allowing it to influence the airline’s operations and strategy while minimizing risk and maintaining flexibility. This initial stake could serve as a stepping stone for future investments, depending on how the privatization process unfolds. The acquisition would provide Lufthansa with significant leverage in the European aviation market, particularly in the highly competitive transatlantic routes to Brazil, where TAP holds a dominant position.
TAP’s attractiveness to Lufthansa—and other potential buyers like Air France-KLM and IAG SA—largely stems from its robust connections to Brazil. TAP operates more flights between Europe and Brazil than any other airline, making it a key player in the lucrative transatlantic market. Brazil, as one of the largest economies in Latin America, represents a significant opportunity for European airlines looking to expand their reach in the region. For Lufthansa, acquiring a stake in TAP would not only enhance its transatlantic network but also provide it with greater access to Brazil’s growing travel market. This move aligns with Lufthansa’s broader strategy of expanding its global footprint, particularly in emerging markets with high growth potential.
Lufthansa is not the only airline eyeing a stake in TAP. Air France-KLM and IAG SA, the parent company of British Airways and Iberia, have also expressed interest in the Portuguese carrier. This competitive interest underscores TAP’s value in the global aviation industry, particularly for airlines looking to strengthen their position in the transatlantic market. Air France-KLM, which has a strong presence in South America through its KLM operations, could benefit from TAP’s network to further consolidate its position in the region. Similarly, IAG SA, with its brands British Airways and Iberia, is looking to expand its influence in the European market, and TAP’s Brazil connections could provide a strategic advantage.
The privatization of TAP is shaping up to be one of the most significant events in European aviation in recent years, with multiple airlines vying for a stake in the company. The outcome of this process will likely have far-reaching implications for the competitive dynamics of the industry.
Portugal’s government reaffirmed its commitment to privatizing TAP in July 2024, although the specific terms of the sale have yet to be defined. The privatization is part of a broader strategy to improve the financial stability and operational efficiency of TAP, which has faced challenges in recent years, including the impact of the COVID-19 pandemic on global travel. The government’s decision to privatize TAP is also influenced by the need to reduce public debt and attract foreign investment. By selling a stake in TAP to a major European airline like Lufthansa, Portugal hopes to secure the capital needed to revitalize the airline while ensuring that it remains competitive in the global market.
The timeline for the privatization process is expected to extend into the first quarter of 2025, with Lufthansa’s offer likely materializing around that time. However, much will depend on the negotiations between the Portuguese government and the interested airlines, as well as the regulatory approvals required for such a transaction.
Any acquisition of a stake in TAP will require regulatory approval from both Portuguese and European authorities. Given the strategic importance of TAP to Portugal’s economy and its role in the European aviation market, the privatization process will be closely monitored by regulators. Lufthansa’s bid for a 19.9% stake is designed to navigate these regulatory challenges by avoiding the threshold that triggers a change of control. This cautious approach allows Lufthansa to establish a presence in TAP without facing the full regulatory burden associated with a larger acquisition.
The potential acquisition is also likely to impact the competitive landscape of the European aviation market. If Lufthansa secures a stake in TAP, it could lead to further consolidation in the industry, with other airlines seeking similar deals to strengthen their market position. The success of this bid could also set a precedent for future privatizations in the European aviation sector.
Lufthansa’s interest in acquiring a 19.9% stake in TAP SA represents a strategic bet on the future of European aviation. By securing a foothold in TAP, Lufthansa aims to enhance its position in the transatlantic market, particularly in the lucrative routes to Brazil. The potential €200 million investment is part of a broader strategy to expand Lufthansa’s global network and strengthen its competitive position.
As the privatization process unfolds, the competition between Lufthansa, Air France-KLM, and IAG SA will be closely watched by industry analysts and regulators alike. The outcome of this process will have significant implications for the future of TAP and the dynamics of the European aviation market. For Portugal, the privatization of TAP is an opportunity to secure much-needed investment while ensuring that the airline remains a key player in the global aviation industry. As the negotiations continue, all eyes will be on how this strategic deal shapes the future of European air travel.
