Portugal Told Both Bidders for TAP That Their Offers Were Too Close

The Portuguese government has opened a final round of negotiations with Lufthansa Group and Air France-KLM over the partial privatisation of TAP Air Portugal, after the state holding company Parpublica delivered its assessment of the two binding offers on 1 September. The bids, submitted at the end of July, cover a 44.9 percent stake, with a further 5 percent reserved for employees. Neither group has disclosed what it offered. Ministers described the two proposals as different in structure but with an overall valuation that is very close, which is why neither has been chosen.

So the government has asked both to improve their offers over a few weeks. That is an unusual position for a seller in a two-horse race, because it depends on each bidder believing the other might still win. International Airlines Group, Iberia’s owner, withdrew earlier in the process, leaving the field to the two European groups that have absorbed most of the continent’s flag carriers over the past fifteen years. The enabling decree allows up to 49.9 percent to go to private investors, with the Portuguese state remaining the majority shareholder.

What is actually being bought is a specific and hard-to-replicate network. TAP is the dominant carrier between Europe and Brazil and holds an unusually deep set of routes to Portuguese-speaking Africa, along with a Lisbon hub that functions as a natural waypoint on the Atlantic. Neither Lufthansa nor Air France-KLM has anything comparable in either market, which is why a mid-sized airline with a complicated financial history has attracted two of the three largest airline groups in Europe.

For passengers the practical stakes are less about ownership than about what follows it. Whoever wins will fold TAP into its alliance and its loyalty programme, which will change how miles earn and burn on Lisbon connections, and will over time reshape which routes survive and which are handed to a group partner. TAP is currently in Star Alliance, home to Lufthansa; an Air France-KLM victory would mean a move to SkyTeam. Nothing changes for travellers this year, but the decision determines the currency of a Lisbon connection for the next decade.

Sources: Euronews, FlightGlobal