Lufthansa Group has won a long-running bid to acquire a 44.9% stake in TAP Air Portugal for €1 billion.
The Portuguese government selected Lufthansa over rival bidder Air France-KLM as it moves ahead with the privatisation of the national carrier, announcing the decision yesterday (14 October). Both airline groups had submitted improved final bids in late September.
The deal could potentially rise to 49.9% for up to €1.2 billion, due to up to 5 percent of shares initially offered to employees as well as a ticking fee. The government will remain the main shareholder.
Portugal’s Prime Minister Luis Montenegro said at a press briefing that Lufthansa’s winning bid was 16% higher than Air France-KLM’s offer, according to Reuters.
Lufthansa is now working with the Portuguese government and state holding company Parpública to finalise the transaction documents, with agreements expected to be signed shortly. The deal still requires approval by European Union regulators.
Industry analysts said the deal marks the latest step in the consolidation of Europe’s airline industry, with smaller carriers likely to seek support from larger, better-capitalised groups as rising jet fuel prices put pressure on the sector, Reuters reported.
Lufthansa said the investment would support TAP’s growth while preserving its national identity and strengthening Portugal’s connectivity, particularly with North and Latin America.
Lufthansa Group also expects its workforce in Portugal to grow from more than 500 to over 1,000 direct jobs by 2030, following the development of a new Lufthansa Technik site near Porto.
TAP carried 16.7 million passengers last year, with its fleet of more than 90 aircraft serving over 90 destinations across Europe, Central and South America, Africa and North America.
The airline operates 52 destinations in Europe, 16 in Central and South America, 14 in Africa and 11 in North America. Its routes to Brazil are considered particularly valuable, according to analysts, AP reported.
Lufthansa Chairman and CEO Carsten Spohr said: “TAP Air Portugal is a strong and profitable airline, our long-standing partner in Star Alliance and internationally successful as a leading carrier on South Atlantic routes. It is known for its outstanding employees and has a compelling business model.
“With today’s decision, the Portuguese government has paved the way for TAP Air Portugal to continue this success story together with Lufthansa Group. At the same time, this allows us to consistently pursue our internationalization strategy and sustainably strengthen our position in the South Atlantic market.
“Our company has enjoyed a close and trusted partnership with Portugal for many years. For decades, we have invested in the country, created and secured highly skilled jobs, and connected Portugal with Europe and the world. We look forward to a shared future with TAP Air Portugal and to continuing our constructive cooperation with the government in Lisbon!”
