TAP Privatisation Narrows to a Two-Horse Race as IAG Walks Away
The long-running saga of TAP Air Portugal's privatisation entered a decisive new phase this week after IAG, the owner of British Airways and Iberia, confirmed it would not submit a bid for the airline. That leaves just two European aviation giants...
The long-running saga of TAP Air Portugal's privatisation entered a decisive new phase this week after IAG, the owner of British Airways and Iberia, confirmed it would not submit a bid for the airline. That leaves just two European aviation giants -- Air France-KLM and Lufthansa -- competing for a 44.9 percent minority stake in Portugal's flag carrier.
The withdrawal was not entirely unexpected. IAG had made clear for months that it was only interested in a path to full ownership. "We have always stated that in any acquisition process, we need a clear path to total ownership so that we can manage and transform the business," the company said in a statement on Wednesday. The Portuguese government's insistence on selling only a minority stake -- with a further 5 percent reserved for TAP employees -- proved an insurmountable obstacle.
What the Two Bidders Bring to the Table
Both remaining contenders submitted non-binding proposals to Parpública, the state holding company managing the sale, before the deadline expired this week.
Air France-KLM, which operates the SkyTeam alliance, sees TAP as a strategic gateway to Brazil and the lusophone world. Portugal's historic ties to Brazil, Angola, and Mozambique give TAP a route network that no other European carrier can easily replicate. The Franco-Dutch group has been publicly enthusiastic about the opportunity, and was the first to announce its bid.
Lufthansa, the Star Alliance anchor, confirmed its proposal hours later. "We are confident that we will be successful, whether against one or two competitors," said Andreas Bartels, Lufthansa's communications chief, at a press briefing in Frankfurt. The German group has recent experience with minority-to-majority airline acquisitions, having taken control of ITA Airways in Italy through a similar phased approach.
Does Losing IAG Matter?
Some analysts worry that having only two bidders could weaken Portugal's negotiating position. "The process may lose one of the players with the greatest financial capacity, reducing competitive intensity and potentially the final valuation," cautioned Nuno Barradas Esteves, an aviation analyst.
Others are less concerned. Dudley Shanley of Goodbody, the Irish investment bank, argued that "the eventual withdrawal of IAG should slightly reduce competitive pressure, but I do not believe it will have a significant impact on the final price." Both remaining bidders, he noted, are fundamentally interested in TAP's Brazil routes -- a strategic asset whose value exists independently of how many groups are bidding.
What Happens Next
Parpública now has 30 days to evaluate the two non-binding proposals and send a report to the government. After that, binding bids will be invited, with the sale potentially closing by summer 2026.
For passengers and airline workers, the question is less about who wins and more about what they plan to do with TAP. Both Air France-KLM and Lufthansa have spoken about expanding the airline's network and investing in fleet renewal. Prime Minister Luís Montenegro has demanded that any buyer commit to developing routes beyond the Lisbon hub, including Porto and Faro.
For foreign residents in Portugal, TAP's future matters directly. The airline operates the majority of direct flights connecting Portugal to North America, Brazil, and Africa. A well-capitalised strategic partner could mean more routes, better connections, and competitive pricing. A poorly managed transition could mean the opposite.
The privatisation has been delayed repeatedly since it was first announced years ago, surviving changes of government, a pandemic, and a state bailout worth more than 3.2 billion euros. This time, with two serious bidders at the table and a clear timeline, it appears the endgame is genuinely underway.
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