Portugal is once again putting its sights on the sale of its state-owned airline TAP Air Portugal. The government has once again put the company on the display and wants to privatize it completely. But these plans are meeting with resistance, particularly from the opposition. The terms of the sale are currently being debated, and a compromise is emerging that could represent a partial success for both sides. Strong competition among potential buyers, including major European corporations, makes the process even more complex.
According to Portuguese Infrastructure Minister Miguel Pinto Luz, the government's goal is to sell 100 percent of TAP. In a hearing before a parliamentary committee, he explained that this was the government's official position. However, the opposition parties, including the PS (Socialist Party) and Chega, are against full privatization and are calling for partial privatization. The latter want to reduce the state's stake, but not give it up completely. However, due to the lack of its own majority in parliament, the government is dependent on a compromise to push through the privatization of TAP.
According to media reports, the sale plan could ultimately result in a sale of 49 percent of the shares to private investors. This solution would allow the government to retain most of the control, while private investors can play an important role. The minister made it clear that the main aim was to ensure that TAP no longer remained in state hands. The government wanted to avoid a "zigzag course", i.e. a situation in which the airline repeatedly switches between state and private control.
A crucial point for both parties is to ensure air traffic to and from Lisbon. A new hub is currently being built in the Portuguese capital, which is crucial for the airline's future success. The new owner must therefore guarantee that the hub traffic, especially to South America, is maintained. This could be an important selling point to convince potential buyers.
Potential buyers and European competition
There is certainly interest from buyers for TAP Air Portugal, and several large European airlines are emerging as potential buyers. Lufthansa in particular is said to have signaled concrete interest in the company as early as late summer 2024, as media reports suggest. The German group, which is aiming for a stronger presence in the South American market in particular, could be a suitable partner for TAP. Initial discussions about a possible entry of Lufthansa into the company, together with its US partner United Airlines, took place as early as February 2020. But at that time, the aviation industry worldwide went into crisis mode due to the effects of the COVID-19 pandemic.
Although Lufthansa did not comment on the rumors at the time, TAP's South American business remains an attractive target. Since the partnership between TAM and LAN was dissolved, the Star Alliance, of which Lufthansa is a member, has seen its market share there fall. Competition is growing in South America, and Lufthansa could strengthen its market position in the region by acquiring TAP.
In addition to Lufthansa, other European airlines such as IAG (International Airlines Group, the parent company of British Airways and Iberia) and Air France-KLM are also mentioned as possible buyers. Air France-KLM CEO Ben Smith also expressed interest in acquiring TAP in 2024, as the airline represents a strategically interesting option for the French group. TAP Air Portugal could be a valuable addition to the European airline alliance, particularly with regard to expansion into South America.
IAG, which attempted to acquire Air Europa in the past but failed due to resistance from the EU Commission, may now be looking for alternative ways to strengthen its South American business. TAP, with its market position in South America, offers a lucrative opportunity for IAG to expand its presence on the continent and gain control of one of the most important air traffic corridors between Europe and South America.
The outlook for TAP and the Portuguese economy
TAP Air Portugal is therefore not only at the centre of political discussions, but also in the focus of international competition between major airlines. The sale of the company could have a significant impact on the Portuguese economy, particularly in terms of jobs and TAP's role as a national symbol. TAP is not only one of the country's most important airlines, but also plays a significant role in Portugal's tourism and transport system.
The privatisation of TAP would free the Portuguese state from a long-term financial burden. In the past, the state has repeatedly had to intervene with financial rescue measures to stabilise the airline, leading to repeated discussions about its long-term viability and the benefits of state ownership. Full or partial privatisation could now usher in a new phase for TAP, in which private investors could run the company more efficiently.
Whether TAP will be sold in full or in part remains to be seen. Political negotiations in Portugal are not yet complete and there are differing opinions on how the privatization should be implemented. However, the interest shown by potential buyers from the European aviation industry shows that TAP continues to play an important role in the international market. Whatever the outcome of the negotiations, TAP Air Portugal will certainly remain a central theme of the Portuguese economy and aviation policy in the coming months.
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