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 within a year or so. All too often, not much comes of these kinds of projects, though it seems like this is moving along nicely.
Several months back, we learned how both Air France-KLM and Lufthansa Group were interested in investing in the airline. There’s now a major update, as we have more details about the offers, with both Air France-KLM and Lufthansa Group submitting binding offers.
In this post:
TAP Air Portugal privatization effort underway
Portugal’s government is currently working on an effort to privatize TAP Air Portugal, with the goal of selling a 44.9% stake, with the possibility to give up a majority stake over time. As part of this, employees would also be offered a 5% stake in the company (meaning that the government would own 50.1% of the company).
The last round of privatization efforts stalled in early 2025, when the country’s center-right minority government collapsed. The coalition returned to power after a May 2025 election, but didn’t have a majority in parliament, potentially causing a sale to be blocked.
Historically, TAP hasn’t been a terribly profitable airline, but its performance has improved over time. In 2021, the airline reported a record €1.6 billion loss, following the coronavirus pandemic. This caused a restructuring, which saw the government invest €3.2 billion in the company.
The airline has returned to profitability in recent years, though we’re talking about fairly mild profits. The company’s profits over the past four reported years (2022-2025) have been €65.6 million, €177.3 million, €53.7 million, and €4.1 million.
While TAP Air Portugal isn’t independently some massively profitable airline, the company offers some significant synergies for other airline groups. TAP has a strong network to Brazil, to Africa, and to the United States. This obviously holds significant strategic value for several airlines. For that matter, a large goal with acquisitions is simply to prevent competitors from getting in on the action instead.
The challenge is, it’s kind of hard to figure out how North America operations would complement the existing arrangements of airline groups. Obviously North America to Europe flying is heavily dominated by joint ventures (split by alliance, sort of), which have a lot of pricing power.
Historically, TAP has operated pretty independently to North America, often undercutting other carriers on price, with attractive fares in all cabins, including for one-way flights. Could we see TAP join one of the major joint ventures? Obviously it would totally change the carrier’s pricing model and market position.
Then there’s the whole issue of regulatory approval. Getting regulatory approval for such a deal will be no small task, given the number of parties that have to sign off on agreements like this, and the concessions required.
Air France-KLM & Lufthansa Group submit binding offers
Initially, all three of the major European airline groups — Air France-KLM, IAG, and Lufthansa Group — were interested in TAP Air Portugal. However, eventually IAG withdrew its interest (I’d guess in part because it realized how tough regulatory approval would be, given its ownership of Iberia), leaving Air France-KLM and Lufthansa Group.
Both airlines have now submitted binding offers. Air France-KLM is making what I’d consider to be the more compelling argument for acquiring TAP, or at least it’s more willing to make the case publicly.
Air France-KLM argues it would position Lisbon as its unique Southern European hub, reinforcing the group’s global network, and expanding connectivity in key markets, in particular in the Americas and Africa. TAP would enter the group’s global commercial network, and the goal would also be to get TAP into the SkyTeam transatlantic joint venture. TAP would also partner with Delta on codesharing, loyalty, etc.
The vision goes beyond that, with TAP joining the Flying Blue program, and the companies working more closely together on maintenance. The airline group has also smartly argued that this deal would be more likely to result in labor peace, and it’s also what pilots at TAP have come out in favor of, given the mess that is Lufthansa Group labor relations.
Here’s what Air France-KLM CEO Ben Smith had to say about this proposal:
“For the past three years, our teams have worked closely with Portuguese stakeholders to come up with our strongest proposal for TAP. What we have submitted today is not just a proposed price for an airline. It is a strategic, extensive, and comprehensive long-term plan for TAP and for Portugal as a whole. It is also a vision of where we would like to take this esteemed flag carrier, expanding on the legacy of what has been built by TAP’s talented people over the past 81 years. Moreover, we are pleased to count on the support and alignment of our long-time partner Delta Air Lines. Our overarching goal to ensure long-term growth for TAP, not only in Lisbon but also in Porto and other cities in Portugal, and to do so sustainably, as part of a robust and international group determined to bring value to its airlines’ home countries. Through this offer, Air France-KLM reaffirms its commitment to create a European global aviation champion, actively supporting European sovereignty.”
Lufthansa isn’t being quite as detailed in publicly explaining its logic for bidding on the airline. The airline group explains it has experience developing national airlines, including SWISS, Austrian, Brussels Airlines, and ITA Airways, while preserving their national identities. The airline group also argues that it offers the necessary scale, experience, and financial stability, to create sustainable value.
Lufthansa Group would strengthen Lisbon’s position as a strategically important Atlantic hub within the group’s network, strengthening service to Latin America, Africa, and North America. Here’s what CEO Carsten Spohr had to say:
“The Lufthansa Group stands for a long-standing, trusted, and strategic partnership with Portugal. For decades, we have been investing in Portugal, creating and securing skilled jobs, and connecting the country with Europe. Our interest in taking a stake in our Star Alliance partner TAP Air Portugal is the next logical step. We want to strengthen Portugal’s national airline as part of the Lufthansa Group and as the leading airline for the South Atlantic, with Lisbon as a strategic hub. With SWISS, Austrian Airlines, Brussels Airlines, and ITA Airways, we have demonstrated how the European integration of our Lufthansa Group secures prospects and growth for our home markets and hubs.”
Bottom line
The government of Portugal is looking to privatize TAP Air Portugal, initially hoping to sell a 44.9% stake (with an additional 5% going to employees), but the government is open to giving up majority control over time. While the goal of privatization has been there for a long time, this is now closer to becoming a reality.
Both Air France-KLM and Lufthansa Group have submitted binding offers for TAP. The government is now going to review these offers, and is expected to make a decision in the coming months. It sure seems to me like there’s more upside with an Air France-KLM deal than a Lufthansa Group deal, though only time will tell how this plays out.
Would you rather see Air France-KLM or Lufthansa Group invest in TAP?
Please don't let the LH Death Star swallow up TP with its tractor beam.
AFKL all the way. Even though I'm almost exclusively *A, I don't want to see Carsten Spohr destroy yet another European airline.
Agree 100%.
LH is a low cost airline masked as an international carrier. The America West of Europe.
“As part of this, employees would also be offered a 5% stake in the company (meaning that the government would own 50.1% of the company).”
Patently incorrect. The government and the workers are two different entities. And you do realize the workers and the government practically by rule have conflicting wants and needs, right?
Read the first paragraph again. Government 50.1%, employees 5%, they are selling 44.9%.
As a resident of Switzerland and knowing Swiss pilots and flight attendants (and as being a Delta FF since 1991), I can only vote for AFKL. Swiss employees and Switzerland in general are not at all happy with Lufthansa, loss of Swissness at Swiss and how Swiss is being managed. Would not wish that on TAP.
As a resident in Germany, I couldn't agree more with you. LX is a top airline that has shown, despite being under LHG, to have a lot of potential and being run very efficiently (as proved by their 2025 performance with respect to other LHG airlines). So what does LHG do? Relocate a large portion of LX management to Germany, giving LH/LHG more control.
Well done Carsten, making DACH-aviation more mediocre!
One by one, ultra-consolidation in EU airlines continues. In the last few years we saw ITA and SAS merged with LH and AFKLM, now TAP is on the chopping block. What'll be the next target? LOT? Air Europa? Finnair?
Never thought I'd see the day I'm rooting for Ryanair and Wizz.
LOT is performing fairly well independently, and like @Samo pointed out earlier, they have even tried to acquire other airlines themselves not too long ago. I don't see them being merged into the "EU big 3" any time soon.
Air Europa recently sold a minority (25-30% iirc) stake to TK, which was approved earlier in the year... LHG/AFKLM could still have majority (but highly unlikely full) ownership, however, UX are doing well for now. That...
LOT is performing fairly well independently, and like @Samo pointed out earlier, they have even tried to acquire other airlines themselves not too long ago. I don't see them being merged into the "EU big 3" any time soon.
Air Europa recently sold a minority (25-30% iirc) stake to TK, which was approved earlier in the year... LHG/AFKLM could still have majority (but highly unlikely full) ownership, however, UX are doing well for now. That being said, given the consolidation trends I'd expect them to be merged in 5-10 years time.
Finnair on the other hand is the only one I'm a bit more uncertain about... they had a fairly bad 2025 (I think largely due to strikes and costs thereof). The closure of Russian airspace and Covid hit them particularly hard as they had the most extensive network to China and Japan amongst European carriers. Imo it's the most likely carrier to be merged next, but it's a tough one to predict.
There's no way LHG would be allowed to swallow up LOT - politically it's a non-starter in Poland.
The real problem is one is Lisbon airport.
Having said that, it is nice to be inside the city, but the rest is mediocre at best.
I can envision Air France / KLM deal really nice: CDG and AMS in the "center of western Europe, CPH to the North and LIS to the South. It really does make sense.
if TP were to join the AF/KL/VS/DL JV or just to be purchased by AF/KL, both the EU and the US DOT should take an incredibly hard look at Delta's Joint Venture with LATAM and subpoena just about every record that exists between AF/KL, Delta, AeroMexico, and Latam.
The coordination between AF/KL and DL is far too tight for any government body to think there would be little coordination between TP and LA regardless of...
if TP were to join the AF/KL/VS/DL JV or just to be purchased by AF/KL, both the EU and the US DOT should take an incredibly hard look at Delta's Joint Venture with LATAM and subpoena just about every record that exists between AF/KL, Delta, AeroMexico, and Latam.
The coordination between AF/KL and DL is far too tight for any government body to think there would be little coordination between TP and LA regardless of the direct coordination.
Like much of Delta, it reeks of corruption
and DL's JV's differ from AA/IAG's and UA's/LHG's how?
you do realize that JVs by nature involve direct collaboration?
The difference is that AF/KL is demonstrating that it is far better run than IAG which is slashing one of its own carriers while LHG continually creates disasters while underperforming despite high market shares.
bang your keyboard all you want but your opinions simply show that you have no clue about the industry
Difference is LATAM and TP wouldn’t have a JV to coordinate but would be owned or heavily influenced by partners that have very tight coordination and strong incentive to coordinate and collaborate absent a JV that would never be approved due to insane overlap
Bang your keyboard all you want. You only show your ignorance on the industry and lack of reading comprehension.
You missed the entire point of likely illegal coordination absent a JV between TP and LA
My hope is that the process ends in failure and the state restarts the process and ends up finding a minority partner either from outside the EU (a la TK/UX) or from outside the airline industry. There's certainly no pressing need for further market consolidation when Iberia et al are making ~15% margins.
If a sale does need to be made to one of the current bidders, AFKL clearly are a better fit as...
My hope is that the process ends in failure and the state restarts the process and ends up finding a minority partner either from outside the EU (a la TK/UX) or from outside the airline industry. There's certainly no pressing need for further market consolidation when Iberia et al are making ~15% margins.
If a sale does need to be made to one of the current bidders, AFKL clearly are a better fit as Portugal want the investor to be content with a minority shareholding and a partnership approach as opposed to the full takeover mode that LHG tend to prefer.
If I were a TP FF I'd be crossing my fingers that AFKL (or even IAG, if they decide to enter) win the bid.
That being said, TP's network doesn't compliment AFKL's network as nicely as it does LHG's... who for some reason poured so many resources into acquiring ITA's does. This should've been the deal LHG should have (and still might) put all their efforts in. Also, the "consolidation game" in the western...
If I were a TP FF I'd be crossing my fingers that AFKL (or even IAG, if they decide to enter) win the bid.
That being said, TP's network doesn't compliment AFKL's network as nicely as it does LHG's... who for some reason poured so many resources into acquiring ITA's does. This should've been the deal LHG should have (and still might) put all their efforts in. Also, the "consolidation game" in the western half of Europe is pretty much coming to an end with TP, as UX is more or less out of it for now. Heck, I think the only intercontinental airline with majority government ownership remaining in Europe is AY. This is an all-or-nothing situation for LHG if they are actually serious about strengthening their position in Africa and mostly in Latin America (where they seriously lag behind IAG and AFKL). Interesting few weeks/months ahead for European aviation.
In addition to AY, LO is also government owned but I don't expect them to become subject to consolidation anytime soon. If anything, they seem to have ambitions to expand and possibly even be the ones doing consolidating (failed Condor and Smartwings deals).
Show me the money. Did the offers include a cash payment? If so, how much? The CEO pleadings make it sound like reasons the government of Portugal should pay them money to manage their majority-owned company.
Didn't Air France-KLM just buy SAS?
Do Europeans not understand the concept of a monopoly? Or has forty years of summers in Brussels truly warped their worldview?
You have to understand how insanely huge Ryanair, Wizzair and Easyjet are in Europe.
I would definitely love to see AFKLM acquire TP. There's a much more complimentary network and I feel like AFKLM is much more competent. We can even see this with SAS having gotten significantly better in just a couple of years.
LH is definitely a much better option for TP, than AF/KL, and much easier merge for FQTV program.
I don't understand why unbiased people try to give the impression that AF/KL will be the best option. it's all French marketing/press trying to upscale a poor product.
Clearly, you don’t know what’s going on with all the labor unrest with Lufthansa! Swiss makes more money than the parent company for years with a smaller fleet lol.
I vote for Air France. Having flied LH group for decades and getting gradual, but constant decline in services (loyalty program included), I do not want this Central Europe monopolist to expand further.
I struggle to see one way in which Lufthansa would be a better match for TAP. AFKL is a functional and successful company mostly on the upwards trajectory, while LHG is basically falling apart under Carsten's exceptionally incompetent management.
Pleeeeeeaase be LH
LIS airport is at capacity which means fares will only go up in time.
As noted, Portugal is close to the US but most of the air service is also from the east coast. A partnership that includes DL could well increase access and flights to Portugal from other parts of the US
AF/KL has a pretty good story to tell about what they have done for SK; there could be a pretty strong line of JV hubs all along western continental Europe from LIS to CDG to AMS to CPH.
It's a longer game being played. A new airport will open in 2034 in LIS that will allow it to become a much more massive gateway to south America and western Africa than it is now. Brasil is increasingly a business destination, having taken over the US as the worlds largest agricultural exporter.
If you consider the lead time for new jets, now is the time. Like for SAS I see a lot of 339s being ordered.
This is terrible news. TAP consistently has amazing cash fares in business class and a pleasant-enough product. It is an amazing transatlantic option to have into the US. Will be really sad to see it become just another branch of AF or LH with their insane fares.
I'll say, their a321neos with the lie-flat up-front are pretty nice. Better to be able to fly nonstop EWR-OPO than to have to connect in LIS.
As much as it'd be sad to lose a *A partner, they'd probably do better with AF/KLM :(
On the plus side for Star Alliance, this could lead to Air Europa switching from SkyTeam to them. The Turkish Airlines stake would make it a high certainty, and it would be great for redeeming from Europe to South America! Especially since Lufthansa Group doesn't have as many South American routes as Air France-KLM, as of now
For entirely selfish reasons (I fly AF/KLM each year and have never flown LH, and given the J reviews, may never): AF/KLM.
^This guy... always braggin' that he flies to Europe and Down Under in J each year...
TAP is what I would describe as the epitome of you get what you pay for. Like you mentioned, they offer the most competitive pricing while offering a decent hard product and a mediocre soft product at best. I love the all aisle access on the A330-900neo but their FAs are apathetic and some are plain rude, which is fine when I am just trying to sleep. My biggest issue with them is LIS. IMO,...
TAP is what I would describe as the epitome of you get what you pay for. Like you mentioned, they offer the most competitive pricing while offering a decent hard product and a mediocre soft product at best. I love the all aisle access on the A330-900neo but their FAs are apathetic and some are plain rude, which is fine when I am just trying to sleep. My biggest issue with them is LIS. IMO, the worst major European hub that desperately needs replacing ASAP. Hopefully the new airport does open in 2034, shame it will not be open by the time they host the World Cup.
Tht is route dependent. They certainly don't offer 'the most competitive pricing', or indeed ANY business class partners awards, on the Brazilian routes...and the four hours to DSS are typically priced in the four figures- each way.
I do fly with them and I'm quite happy with them in general, but I'm obviously not going to be spending €2k to get to Dakar on an A321 anytime soon.
I really don’t like connecting through Lisbon from the east coast. While it’s efficient and can avoid any backtracking, it’s too short of a flight to properly sleep on and increases time spent on infra europe seats vs lie flat. Similar to Dublin.
Could be a nice low cost hub to funnel less premium traffic through. Similar to what Eurowings had at Düsseldorf, although that didn’t turn out to well…
My gut says Air France will prevail as the portugese government has much better relations with France then with Germany. And ulitmatley the government will decide.
This is completely irrelevant. Neither LHG, nor AFKL are government airlines.
No but tap is and they are making the decision
Aparently you have no knowledge about the way things work in a country like Portugal. And the french and dutch governments are shareholders in AFK.
Curious how this all goes because I think TAP is currently a wonderful player in the market. A long-haul business product that basically checks all the boxes. Maybe not the most exciting, but all lie-flat, good food, lounge access etc for usually a fraction of the major carriers.
Their value prop drops quite a bit if pricing becomes comparable to AF, LH etc.
Their pricing is very much comparable to AF, LH etc. Their USP is going to places the others don't- and it makes perfect sense to charge as much as the others, or even a bit extra, for the convenience of one-stop travel between Europe and CNF, BSB, SSA etc.