Portugal Eyes Potential Airline Partners

Portugal’s government has officially relaunched the much-delayed privatization of TAP Air Portugal (TAP). The process was paused following the collapse of the center-right minority government in March, but the new coalition government which returned to office in May is now ready to proceed. It ultimately is aiming to sell a 49.9% stake over the next year, with 5% of that reserved for employees.

There are several major European airline groups vying for a potential stake in the carrier, including the Lufthansa Group, Air France-KLM, and IAG. However, the Portuguese government has said that it expects bids from “numerous interested parties.” including non-EU airlines. It has also structured the flag carrier’s sale model to allow an airline to partner with other airlines, investment funds, and private investors to submit a joint bid.

Key Details Of The Privatization Of TAP

TAP has had private ownership before, when the Atlantic Gateway consortium headed up by David Neeleman took a 45% stake in the airline in 2016. However, during the pandemic the government re-nationalized the carrier and provided it with a €4.4 billion loan and rescue plan. Once the pandemic subsided, the government again signaled its intent to sell off a stake in the airline, but the process has been stalled due to political turbulence.

The privatization process was re-launched last week with a decree-law to sell up to 49.9% of TAP’s capital, although the government has signaled that it would be open to selling a larger stake should the circumstances be favorable. The sale is structured in four phases, which are expected to be completed by mid-2026:

Pre-qualification: All interested parties have 60 days to formally express an intention to proceed with their interest in the carrier and to qualify for the proposal process.

Proposal submissions: All qualified parties will be required to submit a detailed proposal during the course of Q4, with an emphasis on how their organization will “foster synergies” with TAP.

Binding offers: Viable proposals will be short-listed (likely to 3–5 participants at most), and will be asked to submit binding offers after due diligence processes.

Final negotiations: The government will enter into final negotiations with its preferred bidder to complete the sale transaction.

Reuters reports that Portuguese Prime Minister Luis Montenegro has emphasized the need for “a strategic partner with aviation expertise”, adding that the aim is not just to raise capital but to develop TAP into a more globally competitive airline. He said:

“I am convinced that there will be many interested parties, and I expect there will be non-EU carriers expressing interest as well. Ideally, we will see TAP integrated into a larger group within a year, with a greater capacity to generate synergies and positive value.”

What Are Potential Investors Purchasing?

Interested investors will be acquiring a stake in one of the top 20 European airlines based on passenger count and fleet size. A member of Star Alliance, TAP carried 16 million passengers in 2024, delivering net income of €53.7 million on record revenue of €4.2 billion. The mainline carrier operates an all-Airbus fleet of 80 aircraft, with a further 22 on order (see table below), and its regional subsidiary TAP Express operates a further 19 Embraer E190/195s.

According to data from Cirium, in the first half of 2025 TAP operated 100 routes involving 89 different airports. It served 88 destinations from its main base at Lisbon’s Humberto Delgado Airport (LIS), and a further 12 from its secondary base in Porto.

For potential investors, one of the airline’s main strengths is its extensive network to Brazil, where it serves 14 different destinations. But equally appealing will be its geographical position at the western edge of Europe, and the rapid growth of its North American network where it now has 11 destinations.

Which Airlines Are Likely To Submit A Bid?

Lufthansa Group is seen as one of the front-runners in the bidding process. Not only is it already a Star Alliance partner of TAP, but TAP’s Brazil network would be a notable addition as it eyes expansion into Latin America, an area where the group is notably weaker. However, the ink is barely dry on its agreement to acquire ITA Airways, and some industry analysts question whether it has the appetite for a further acquisition and integration. The answer is probably yes, if only to keep TAP out of its competitor’s hands.

IAG, which owns British Airways, Iberia, Aer Lingus, and Vueling, is another potential suitor. It re-iterated its interest in acquiring a stake in the Portuguese carrier earlier this year, and after it was forced to abandon its potential purchase of Air Europa, TAP could be its next-best path to locking up its dominance in Southern Europe. However, given the network overlap between airlines, IAG might be forced to give up a considerable (and potentially preclusive) number of slots at the major airports across the Iberian peninsula.

Likely the best-placed group is Air France-KLM, which just announced its intention to take a controlling stake in SAS and would love to have increased strength in both Northern and Southern Europe. It has already indicated that it is interested in bidding, but will it do so alone? After all, there is precedent for the SkyTeam partners operating as an investment club. Virgin Atlantic is jointly owned by Delta Air Lines (49%) and Air France-KLM (31%), and Delta, Air France-KLM and Korean Air just jointly took a 25% stake in WestJet. The government of Portugal might well favor a truly global consortium as it seeks out those synergies for its flag carrier.