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Lufthansahas defeated Air France-KLM to purchase a 44.9% share in TAP Air Portugal, the Independent reports. The two aviation groups were the only bidders in the contest. It is a significant step towards privatizing Portugal’s airline. Although the deal has been made, it still requires European Union approval.
The deal does not represent the total removal of government influence in Portugal’s aviation industry. The Portuguese government will return a majority share, with the remaining 5% stake kept aside. This measure allows the airlines’ employees to buy shares. Full privatization is expected by 2028.
The Winning Bid
Lufthansa Group won the bidding war by offering a deal worth €1.2 billion ($1.3 billion). Portuguese Prime Minister Luis Montenegro told a news briefing that the deal exceeded Air France-KLM’s offer by 16%.
TAP CEO Luis Rodrigues also spoke about the deal at the World Aviation Festival, stating that the deal would allow TAP to “access a larger pool of resources at better value.” Simultaneously, the Portuguese Government has managed to retain its majority share, along with a generous amount of shares for employees to purchase.
TAP and the government think the deal will provide long-term sustainability. It could bring investment that will allow for an expansion of operations and connectivity at Lisbon, Porto, the Azores and Madeira. Infrastructure Minister Miguel Pinto Luz has also claimed that Lufthansa Group has made commitments to grow TAP’s fleet by 117 jets by 2035 and 130 jets after this date.
Analysts Have Criticized Lufthansa’s Move
The investment expected by the Portuguese Government requires plenty of available capital. Analysts have challenged whether Lufthansa Group can provide this because of its financial woes. It has pledged to centralize operations and increase operating profit to between 8% and 10% between 2028 and 2030. Taking on a new airline requiring funding would seem to go against this mission.
Aviation analyst John Strickland spoke with Reuters about these issues. He said:
“Lufthansa is still struggling financially. Lufthansa Deutsche Airlines, as the largest part of the group, is still losing money. It has to get its own house in order.”
On the other hand, there is a substantial reason that Lufthansa Group thinks it will benefit from the deal. The group has acquired other European flag carriers like Austrian Airlines, ITA Airways and SWISS. Yet, Portugal is a market that it hasn’t previously been able to pull into its sphere of influence.
The Portuguese Government Has Made Previous Attempts To Sell Off TAP
The Lufthansa Group deal is not the first time TAP Portugal has approached privatization. The Portuguese Government made previous failed attempts in 1998 and 2015. It launched the most recent effort in 2024, when the government plotted to sell a 66% stake in the airline. The customer was a consortium called Atlantic Gateway. It included Frank Lorenzo, a US businessman, Miguel Pais do Amaral, a Portuguese entrepreneur, David Neeleman, founder of JetBlueand Azul, and Globalia, Air Europa’s parent company.
The efforts continued into 2015, when the government sold a 61% share to the Atlantic Gateway consortium formed by partners David Neeleman and Humberto Pedrosa. The deal ensured that Portugal would remain the airline’s main hub for another 30 years, and that the consortium would purchase the airline 53 new Airbus jets. This included 14 A330s and 39 A320s.
This privatized period was short-lived. A new left-oriented government came to power. In February 2016, it came to a new deal with the consortium, giving the government the controlling share, while preserving a 45% share of Atlantic Gateway. The fallout of the privatization deal continued for a decade after. In November 2025, police raided TAP airlines as part of a corruption probe over the Airbus leasing deal relating to the privatization deal.
