Lufthansa Beat Air France-KLM for TAP, and Brazil Is the Reason

Lufthansa Group and the Portuguese government signed an agreement in Lisbon on November 3 for the German group to buy 44.9% of TAP Air Portugal for €1.025 billion, about $1.2 billion. Lufthansa will pay from existing liquidity. The deal still needs European Commission approval, and closing is expected in 2028.

Air France-KLM had looked like the natural suitor, but Portugal said Lufthansa’s proposal was up to 16% higher, with less uncertainty. Prime Minister Luís Montenegro called it the choice that best protected national interests. Lufthansa could lift its holding to 49.9% by buying shares set aside for TAP employees, taking total consideration to roughly €1.2 billion.

Brazil is the strategic prize. Lufthansa estimates it carries about 9% of Europe–Latin America traffic today, a share that would rise to around 20% with TAP, whose Lisbon hub has deep links to Brazilian cities. The group expects up to €450 million in synergies and would make Lisbon its seventh hub, with growth also planned toward Portuguese-speaking Africa and North America.

Lufthansa has pledged to preserve TAP’s Portuguese identity and expand investment, including a Lufthansa Technik facility near Porto. The government has floated a fleet of 130 aircraft. For travelers, the practical changes, such as schedules, joint fares and loyalty benefits, are likely to arrive only after regulators sign off and integration begins.

Sources: Simple Flying