Azores Airlines Privatisation Relaunches: Government Switches to Direct Negotiation as EU Deadline Looms

The Azores Regional Government announced on Tuesday that it will launch a fresh attempt to privatise Azores Airlines, this time through a direct negotiation process rather than the public tender that failed earlier this year. The decision marks a significant strategic pivot for the archipelago's flagship carrier and raises fresh questions about who will ultimately take control of the airline.

Why the First Attempt Failed

The previous privatisation process ended without a deal in early March after the jury concluded that the sole admitted bid, from the Atlantic Connect Group consortium, posed "unacceptable risks." The consortium had offered 17 million euros for 85 percent of the airline's share capital in November 2025, but the jury flagged concerns about a shareholders' agreement that could dilute public ownership and a management team with limited aviation experience.

A special monitoring commission subsequently confirmed that the entire process was conducted with "legality, transparency, rigour, impartiality and fairness," clearing the way for a second attempt without legal complications.

What Changes This Time

Duarte Freitas, the regional secretary for Finance, Planning and Public Administration, said the switch to direct negotiation is designed to bring "greater efficiency and agility" to the process. Rather than waiting for bids through a formal public tender, the SATA holding company will now prepare a new set of specifications and actively seek out potential buyers.

The new process will retain the same independent supervisor, Professor Augusto Mateus, who chaired the jury of the previous tender. The monitoring commission, composed of academics Joao Teixeira and Teresa Tiago and economist Antonio Maio, will also continue in its oversight role.

Freitas emphasised that the new specifications must safeguard workers' rights, maintain existing jobs, protect the region's strategic interests, and guarantee the continuity of essential air links to and from the Azores.

The EU Clock Is Ticking

The urgency behind this second attempt is not merely political. The European Commission, which in June 2022 approved 453.25 million euros in state aid for the airline's restructuring through loans and state guarantees, stipulated that a controlling stake of at least 51 percent must be divested by the end of 2026. Failure to meet that deadline could trigger consequences for the restructuring agreement and potentially require the repayment of state aid.

"The government, with this resolution, also publicly signals the commitment needed for speed in this new procedure," Freitas told reporters in Horta.

What It Means for Travellers and Expats

For the thousands of expats, digital nomads and tourists who depend on Azores Airlines for connections between the islands and mainland Portugal, the privatisation carries real stakes. The airline operates routes that no other carrier covers, and any new owner will need to balance commercial viability with the social obligation to maintain lifeline services to smaller islands like Flores, Corvo and Santa Maria.

The Azores have become an increasingly popular destination for remote workers and retirees drawn by the islands' natural beauty, affordable cost of living and generous tax incentives under the regional tax regime. Reliable, affordable air connectivity is a non-negotiable part of that appeal.

The SATA board will now draft a new set of requirements for the government's approval before actively engaging potential buyers. With less than nine months until the EU deadline, the pressure to close a deal this time around is considerable.