The Portuguese government has selected German aviation giant Lufthansa as the winning bidder in the privatisation of national airline TAP, approving a €1.2 billion offer for a minority stake in the carrier.
The decision, taken at Wednesday’s Council of Ministers meeting (October 14), sees Lufthansa defeat rival Air France-KLM in the race to become TAP’s strategic industrial partner.
According to Portuguese business newspaper ECO, the German group’s proposal values TAP at approximately €2.4 billion and includes ambitious plans to expand the airline’s fleet, strengthen its international operations and invest in aviation infrastructure in Portugal.
Under the agreement, Lufthansa will initially acquire 49.9% of TAP for €1.025 billion. A further €118 million relates to a 5% stake reserved for employees, which Lufthansa will acquire if workers do not take up the offer.
An additional €58 million is linked to the sale of aviation services businesses Cateringpor and SPdH, bringing the total financial package to €1.201 billion.
Air France-KLM submitted a competing offer worth €1.038 billion, with the possibility of an additional €100 million depending on TAP meeting financial targets by 2028. However, uncertainty surrounding those conditions reportedly weighed against the Franco-Dutch group.
Plans to expand TAP fleet
Beyond the financial offer, Lufthansa has committed to significantly expanding TAP’s operations.
The airline currently operates 101 aircraft, but the German group plans to increase that number to 117 by 2035 and eventually to 130 following the opening of Lisbon’s new airport.
The proposed fleet investment could reach €4 billion and includes the potential transfer of up to eight Airbus A350-900 aircraft after 2030.
Lufthansa has also pledged to establish a civil and military aviation training school at Tancos Air Base, involving substantial investment in infrastructure and the creation of approximately 200 jobs.
Both bidders committed to maintaining existing jobs and respecting collective labour agreements.
TAP to remain in Star Alliance
The acquisition will see TAP become part of Europe’s largest aviation group, alongside Lufthansa, Swiss, Austrian Airlines, Brussels Airlines and ITA Airways.
Lufthansa Group carried approximately 135 million passengers in 2025, compared with TAP’s 16.7 million.
For the German group, TAP’s greatest attraction lies in its extensive connections between Europe, Brazil and other South Atlantic destinations.
The acquisition would increase Lufthansa’s market share in Latin America from approximately 9% to 20%, according to ECO.
Importantly, TAP will remain a member of Star Alliance, avoiding the alliance change that would have been expected under Air France-KLM, which belongs to SkyTeam.
Lufthansa also intends to seek TAP’s inclusion in its transatlantic partnership with United Airlines.
Lisbon is expected to retain its strategic importance as a hub for connections between Europe, South America and Africa.
Full privatisation remains possible
Lufthansa has also presented a proposal for a potential second phase of privatisation, which would see it acquire the remaining 50.1% of TAP.
The group has offered €863 million for the remaining shares, together with a 5% stake in Lufthansa Group valued at approximately €488 million.
According to ECO, the combined proposal would value TAP at around €2.55 billion.
However, this second phase remains a proposal rather than an approved transaction.
Deal unlikely to be completed before 2028
Despite Wednesday’s government decision, the privatisation process is far from complete.
The next steps include final negotiations, approval of contractual arrangements and regulatory authorisation from Portuguese and European competition authorities.
The European Commission’s review is expected to be particularly significant and could take between 18 and 24 months.
Finance Minister Joaquim Miranda Sarmento has already indicated that the transaction is unlikely to be completed before 2028.
Speaking during the presentation of Portugal’s 2027 State Budget, he explained that the financial impact of the privatisation would therefore only be reflected in public debt figures in 2028.
For TAP, the government’s decision represents a major step towards securing a long-term strategic partner after years of uncertainty surrounding the airline’s ownership and future.
A “good deal”
Commenting on the deal on SIC Notícias, journalist and economic analyst José Gomes Ferreira described the partial privatisation as a “good deal” for the Portuguese State.
He highlighted not only the sale price but also projections suggesting that dividends from TAP and Lufthansa shares could bring the total financial return to around €3.4 billion by 2040.
He said the agreement could mark the end of TAP’s dependence on taxpayers’ money, although he cautioned that international economic conditions and operational challenges could affect those projections.