In the summer of 2025, the government of Portugal relaunched a project to privatize national carrier TAP Air Portugal, with the goal of selling a large stake in the airline. This has of course been a rather drawn out process, and we’ve known that both Air France-KLM and Lufthansa Group had submitted binding offers for such an investment, with a decision expected imminently.
There’s now an update, as the Portuguese government has picked a “winner” in the bidding process…
Lufthansa Group wins bid for TAP Air Portugal investment
Lufthansa Group has won the bid for the purchase of a 44.9% stake in Portuguese flag carrier TAP Air Portugal. Employees will get a 5% stake, while the government will retain a 50.1% stake for the time being. An official announcement was made at the extraordinary cabinet meeting in Portugal today, Wednesday, October 14, 2026.
Why did Lufthansa Group win out over Air France-KLM? Well, it’s because Lufthansa Group is offering an all-cash deal, while Air France-KLM has a proposal that combines cash and shares in the airline group. In the words of Portuguese prime minister Luís Montenegro, Lufthansa Group was chosen because its “financial offer is 16% higher than the rival proposal and carries a lower degree of uncertainty.”
Montenegro went on to say that “the government is successfully bringing to a close the first phase of the privatisation of our national airline,” claiming this was a process “conducted with strict respect for competition, a stringent approach to negotiations and complete transparency vis-à-vis the Portuguese public.”
The transaction will reportedly bring in “1.201 billion euros in this first phase.” Even as the government retains a majority stake in the company, “Lufthansa will be responsible for executive and operational management.” “This is an offer that gives the airline a total valuation of 2.552 billion euros,” described as “a figure far above the independent valuations put forward a few years ago or even just a few months ago.”
There seems to be quite some optimism here, as the prime minister explains “we are ensuring the growth of TAP, the growth of the fleet, the growth in passenger numbers, the growth in destinations and routes, and also the growth in investment, not only in TAP but across the entire aeronautics sector in Portugal.”
Of course an investment like this requires regulatory approval, so I’d expect that even if terms are fully agreed to, things could still change before all authorities sign off on the deal.
What are the implications of Lufthansa Group investing in TAP?
While I understand that Lufthansa Group maybe has stronger financials than Air France-KLM on the surface, I was certainly rooting for Air France-KLM to get the deal. I mean, if nothing else, Air France-KLM does a much better job with labor relations than Lufthansa Group does, and I feel like that should be worth something.
With Lufthansa Group winning the bid for TAP Air Portugal, how is this likely to play out?
- Obviously owning a stake in TAP will greatly strengthen Lufthansa Group’s position in South America (particularly Brazil), where the airline group otherwise isn’t particularly strong
- While TAP is already in the Star Alliance, it’s not in the transatlantic joint venture, so it’ll be interesting to see if an effort is made for the airline to join; currently TAP undercuts the competition on price across the Atlantic, while that would stop if there were antitrust immunity, and fares and schedules are coordinated
- On some level, the incentive for an airline group to acquire another carrier is simply to keep the airline out of the hands of a competitor, given the extent to which long haul European aviation is controlled by the “big three” European airline groups
Bottom line
Lufthansa Group has come out on top of Air France-KLM when it comes to the bidding for TAP Air Portugal. The decision apparently largely came down to Lufthansa Group making an all-cash offer. Both Lufthansa Group and Air France-KLM have the same geographic upside with a TAP investment, though from a labor perspective, I certainly have to imagine this would’ve played out better with Air France-KLM.
What do you make of Lufthansa being the winning bidder for TAP Air Portugal?
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