TAP Sale: Lufthansa Bid Could Reshape Portugal Airfares

Even before the ink dried on the government’s long-awaited privatisation blueprint for TAP Air Portugal, the German airline group Lufthansa confirmed it is running the document through what it calls a “forensic” reading. Lisbon wants fresh capital without losing control; Lufthansa wants another piece in its multibrand puzzle. Whether the two ambitions can coexist will dominate Portuguese aviation news in the coming months.

Germany’s flag-carrier circles Lisbon

After years of on-again, off-again overtures, the Cologne-based group has re-emerged as the most vocal contender. Executives close to Carsten Spohr say TAP fits Lufthansa’s strategy of stitching together a web of Europe-to-Latin America routes, adding critical mass to its recent investment in ITA Airways. The national carrier’s unusually strong presence in Brazil, Angola and Mozambique is viewed inside Lufthansa’s headquarters as “a bridgehead to growth markets” that none of its current subsidiaries can match.

What the Portuguese state is demanding

The 82-page caderno de encargos issued in September obliges any buyer to keep the airline’s head office, main hub and most maintenance jobs in Lisbon. It also insists on protecting “strategic routes” that link the mainland with the Azores, Madeira, Brazil and other Lusophone destinations. Beyond route guarantees, the government expects concrete funding for fleet renewal, sustainable aviation fuel projects and expanded engineering capability. Only carriers posting at least €5 billion in revenue in one of the past three years are even allowed to bid, ensuring the field is limited to the industry’s heavyweights.

Rival bidders keep the heat on

Paris-based Air France-KLM has quietly dispatched teams to Ponta Delgada and Terceira to show it understands the archipelago’s dependence on air links. Meanwhile, IAG – owner of British Airways and Iberia – signals that TAP’s dominance on the Lisbon-São Paulo corridor would plug a glaring hole in its South-Atlantic network. All three groups are preparing non-binding offers for up to 44.9 % of TAP’s capital, with a further 5 % reserved for employees, leaving the Portuguese state with a slim majority. Market insiders expect preliminary terms to land on the government’s desk before the 22 November deadline.

Brussels holds the biggest veto card

The European Commission’s competition team already forced Lufthansa to surrender slots in Milan-Linate when it bought 41 % of ITA. Analysts at SkyExpert believe a TAP deal would trigger an even tougher review because a combined carrier could dominate the Lisbon–Frankfurt, Lisbon–Munich and Lisbon–Brussels routes. Cedendo slots, code-share quotas or even entire point-to-point licences are being floated as remedies. Investors remember Lufthansa’s abrupt withdrawal from the Air Europa talks when Madrid’s demands became too onerous; a similar retreat in Lisbon cannot be ruled out.

Why passengers and workers are watching nervously

For residents in Portugal, the stakes are tangible. Ticket prices on monopoly routes, the future of the Portela hub while Montijo languishes in limbo, and the promise that no large-scale layoffs will follow a sale all hinge on the final ownership structure. The government says it will not sign a contract “at any price”, but cabin crews recall 2015’s failed privatisation, when pay and route cuts arrived within months. On the positive side, Lufthansa’s deep pockets could accelerate fleet modernisation and bring additional North-American frequencies via its Star Alliance partners.

Countdown to binding bids