IAG Walks Away From TAP Sale — Lufthansa and Air France-KLM Left as Only Bidders for Portugal's Flag Carrier

IAG, the parent company of British Airways and Iberia, has formally withdrawn from the race to acquire a stake in TAP Air Portugal, leaving Lufthansa Group and Air France-KLM as the only two bidders in what has become Europe's most consequential airline privatisation of the year.

The withdrawal came at the 2 April deadline for non-binding expressions of interest. IAG confirmed the decision in a brief statement: "Following careful consideration, IAG has decided that it would not be in the best interests of our shareholders to proceed in the process to acquire an investment in TAP."

Two Suitors, One Airline

Both Lufthansa Group and Air France-KLM formalised their non-binding offers on the same day, each eyeing the 44.9 per cent industrial-partner stake that the Portuguese government is putting up for sale. A further five per cent is reserved for TAP employees.

The state holding company Parpública has been given 30 days to assess the merits of each proposal. After that, selected bidders will be invited to submit binding offers within 90 days, with the privatisation expected to close in the second half of 2026.

What the Bidders Want

For Lufthansa, TAP would add a strong Lisbon hub and unmatched access to Brazil and lusophone Africa — markets where the German group has limited direct presence. Lufthansa already operates a multi-hub model through Swiss, Austrian Airlines, Brussels Airlines, and ITA Airways, and TAP would extend that network to the South Atlantic.

Air France-KLM's interest is more defensive. The Franco-Dutch group already has a strong position on transatlantic routes through its joint venture with Delta, but TAP's Brazilian network — the largest of any European carrier — would be a significant competitive addition. Portugal's geographic position also makes Lisbon a natural connecting hub for passengers from North America heading to southern Europe and Africa.

TAP's Financial Turnaround

The airline posted its fourth consecutive annual profit in 2025, reporting net income of EUR 4.1 million. TAP says the figure would have been EUR 46 million without the impact of changes to corporate income tax rates. The modest profit follows a EUR 3.2 billion state rescue during the pandemic, which the European Commission approved in 2021 under strict restructuring commitments that expired at the end of 2025.

The turnaround has made TAP a more attractive proposition than it was during previous, failed privatisation attempts. The airline carried 16.4 million passengers in 2025, and its Lisbon hub handled record traffic despite the constraints of Humberto Delgado Airport's single-runway operation.

What Comes Next

The government has framed the sale as a strategic priority. Prime Minister Luís Montenegro has said Portugal needs an industrial partner that can invest in TAP's growth, modernise its fleet, and preserve Lisbon's role as a transatlantic hub — while maintaining the airline's headquarters and operational base in Portugal.

For residents and expats, the outcome will shape route networks, ticket prices, and connectivity for years to come. A Lufthansa-backed TAP could mean deeper integration with Star Alliance and better connections to central Europe. An Air France-KLM deal would tilt the airline toward SkyTeam and the North Atlantic corridor.

Either way, Portugal's flag carrier is about to change hands for the first time since its renationalisation in 2020. The question is no longer whether TAP will be privatised, but which European aviation giant will claim it.