The Portuguese government has selected Lufthansa Group for the sale of up to 49.9% of TAP Air Portugal. The decision was approved by the Cabinet, with the transaction valued at EUR 1.201 billion.
The sale covers a 44.9% stake, with up to an additional 5% to be included if employees do not exercise their purchase rights. The Portuguese government will retain a 50.1% stake and remain the largest shareholder.
The final selection was between Air France-KLM and Lufthansa Group, evaluated on three criteria: technical proposals, contractual terms, and financial offers. Both companies substantially improved their proposals during the final negotiation stage, resulting in closely matched strategic plans and contract terms. However, Lufthansa Group’s proposal was selected because its financial offer was stronger and involved less uncertainty. Lufthansa’s offer was up to 16% higher than that of Air France-KLM.
Both companies also submitted proposals for acquiring a majority stake, which could be pursued in a second phase. Under Lufthansa Group’s proposal, the additional acquisition would be valued at EUR 1.351 billion, bringing TAP Air Portugal’s total direct valuation to EUR 2.552 billion. This includes a share swap equivalent to a 5% stake in the Lufthansa-TAP Group, valued at EUR 488 million, which would make the Portuguese government the second-largest shareholder in the combined company. The cash portion would amount to EUR 863 million, on the assumption that the second phase is completed by July 2028.
The Portuguese government said that Portugal’s strategic interests would be protected, including the retention of TAP Air Portugal’s brand and headquarters, the strengthening of Lisbon as a hub, the maintenance of routes to Portugal’s island regions, the basing of eight aircraft at Porto Airport, and a stronger presence in Latin America, where the combined company would hold a 20% passenger market share.
The fleet will expand to 117 aircraft by 2035 and to 130 aircraft after 2035, requiring investment of EUR 3 billion to EUR 4 billion. Up to eight Airbus A350-900 aircraft could be transferred to TAP Air Portugal from 2030 onward.
The plan also includes an investment of around EUR 300 million in maintenance and engineering operations in Santa Maria da Feira, creating 700 jobs, as well as the establishment of an aviation school in Tancos.
Of the nine board members, five, including the chair, will be appointed by the Portuguese government. Lufthansa Group will appoint three executive directors, while the Portuguese government will appoint one.
The Portuguese government expects to recover the EUR 3.2 billion it has invested over the past decade through future dividends and the valuation of its stake in Lufthansa Group.
Procedures for the second phase, involving the sale of a majority stake, are expected to begin shortly, with completion anticipated by early 2028.
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