TAP Portugal Privatization Confirmation Attracts Strong Contenders

Portuguese flag carrier TAP Portugal is the latest European airline to garner interest in a region undergoing consolidation. The Portuguese government has had plans to privatize or partially privatize the national carrier for some time. In June, the Minister of Finance of Portugal Fernando Medina indicated that there was ‘no rush’ for the sale to be completed and that the government would “ensure a privatization process that reinforces TAP’s strategic role in the Portuguese economy.”

In the last week, the Portuguese cabinet approved consideration of a privatization strategy that would see at least 51 percent of the carrier offered for sale. The Financial Times reported that the move could see a ‘potential bidding war’ between Air France-KLM and IAG (International Airlines Group), the parent company of British Airways.

IAG’s chief executive Luis Gallego said: “We’ll have to study the process [of privatisation] and carefully consider the details, but we feel optimistic and believe that TAP can become another success story within IAG.” Reuters reported an Air France-KLM spokesperson confirming that the consortium maintained a ‘strong interest’ in purchasing TAP Portugal following the announcement of its bid for 19.9 percent of SAS this week. The bid for part of SAS is dependent on approval from European and U.S. regulators.

Lufthansa Group Looks at Options

Reuters also reported that TAP Portugal’s Star Alliance partner airline Lufthansa may also be a contender for the Portuguese airline. The Air France-KLM stake in SAS announced this week is set to see the Scandinavian carrier exit the Star Alliance in the near future. The German airline consortium has previously announced plans to invest in Italian carrier ITA Airways. The deal would see Lufthansa take a 41 percent stake in ITA Airways which is currently sitting with European regulators.

The delay in approval for the Lufthansa-ITA Airways deal was questioned last month by Italian Prime Minister Giorgia Meloni. “Something curious is going on,” Reuters reported Prime Minister Meloni saying at the G20 summit in September. “The same European Commission which asked us for years to find a solution to the ITA problem then blocks it when we do come up with a solution. So we don’t really understand, and we would like an answer.” In response, the European Commission noted that the Lufthansa-ITA Airways deal had yet to be lodged with the Commission.

Reuters cites a source ‘with knowledge of the Portuguese government’s position as saying “One thing is certain: Portugal would want the buyer of TAP to be a reputable and strong airline…and at the same time enhance not only the Lisbon hub, but also other airports like Porto.” There appears to be some way to go with the privatization of TAP Portugal and with three high profile airline consortiums showing interest it will have an influential impact on the European airline landscape.

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John Flett

John has always had a passion for aviation and through a career with Air New Zealand has gained a strong understanding of aviation operations and the strategic nature of the industry.

During his career with the airline, John held multiple leadership roles and was involved in projects such as the introduction of both the 777-200 and -300 type aircraft and the development of the IFE for the 777-300. He was also part of a small team that created and published the internal communications magazines for Air New Zealand’s pilots, cabin crew and ground staff, balancing a mix of corporate and social content.

John is educated to postgraduate level achieving a Masters degree with Distinction in Airline and Airport Management. He has been the course director of an undergraduate commercial pilot training programme at a leading London university and a member of Heathrow Community Trust’s ‘Communities for Tomorrow’ panel.

John is currently living in Canada and is contracted as an external instructor for aviation-related organizations.

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