In the summer of 2025, the Portuguese government relaunched a plan to privatize national carrier TAP Air Portugal, with the aim of selling a significant stake in the airline. This has of course been quite a long process, and we know that Air France-KLM and the Lufthansa Group had submitted firm offers for such an investment, with a decision expected soon.
There is now an update, as the Portuguese government has chosen a “winner” in the tender process…
Lufthansa Group wins tender for TAP Air Portugal investment
Lufthansa Group has won the tender to purchase a 44.9% stake in Portuguese national airline TAP Air Portugal. Employees will get a 5% stake, while the government will maintain a 50.1% stake for the moment. An official announcement was made during the extraordinary cabinet meeting in Portugal today, Wednesday October 14, 2026.
Why did the Lufthansa group take over Air France-KLM? Well, that’s because Lufthansa Group is offering an all-cash deal, while Air France-KLM has a proposal combining cash and shares in the airline group. In the words of Portuguese Prime Minister Luís Montenegro, the Lufthansa group was chosen because “its financial offer is 16% higher than that of its competitor and involves a lower degree of uncertainty”.
Montenegro added that “the government managed to successfully close the first phase of the privatization of our national airline,” saying it was a process “carried out with strict respect for competition, a rigorous approach to negotiations and full transparency towards the Portuguese public.”
The transaction would bring in “1.201 billion euros in this first phase”. Although the government retains a majority stake in the company, “Lufthansa will be responsible for executive and operational management.” “This is an offer which gives the airline a total valuation of 2.552 billion euros”, described as “a figure much higher than the independent valuations put forward a few years, or even a few months ago”.
There seems to be some optimism here, as the Prime Minister explains: “we guarantee the growth of TAP, the growth of the fleet, the growth of the number of passengers, the growth of destinations and routes, as well as the growth of investments, not only in TAP but in the entire aviation sector of Portugal.”
Of course, an investment like this requires regulatory approval. So I expect that even if the conditions are fully agreed, things could still change before all authorities approve the deal.
What are the implications of an investment by the Lufthansa group in TAP?
While I understand that on the surface the Lufthansa Group may have a stronger financial position than Air France-KLM, I was certainly in favor of Air France-KLM getting the deal. I mean, at least Air France-KLM does a much better job of labor relations than the Lufthansa Group, and I think that should be worth something.
With the Lufthansa group winning the bid for TAP Air Portugal, how will it happen?
- Clearly, owning a stake in TAP will significantly strengthen the Lufthansa Group’s position in South America (especially Brazil), where the airline group is not otherwise particularly strong.
- Although TAP is already part of the Star Alliance, it is not part of the transatlantic joint venture. It will therefore be interesting to see if an effort is made to get the airline to join; Currently, TAP weakens price competition across the Atlantic, whereas this would cease if there was antitrust immunity and if fares and schedules were coordinated.
- In some ways, the incentive for an airline group to acquire another carrier is simply to keep the airline out of the hands of a competitor, given the extent to which European long-haul aviation is controlled by the “big three” European airline groups.
Conclusion
The Lufthansa group won against Air France-KLM in the call for tenders for the takeover of TAP Air Portugal. The decision was apparently largely due to the Lufthansa Group making an all-cash offer. Lufthansa Group and Air France-KLM have the same geographic advantage with a TAP investment, although from a labor perspective I certainly have to imagine it would have worked better with Air France-KLM.
What do you do with Lufthansa, winner of the takeover of TAP Air Portugal?
Gn bussni
