Portugal has moved the partial privatisation of its national airline TAP Air Portugal into a new phase, opening negotiations with Air France-KLM and Lufthansa after both groups submitted binding offers.
The Portuguese government said the two proposals were different but received very similar overall assessments, prompting officials to give both bidders an opportunity to improve their offers before selecting one for the final negotiation.
Two Major European Airlines Remain in the Race
Air France-KLM and Lufthansa submitted their binding proposals in July for a minority stake in TAP. The process was narrowed to these two groups after International Airlines Group (IAG), the parent company of British Airways and Iberia, withdrew from the competition.
Portugal's government is seeking to sell 44.9% of TAP, while a further 5% stake is reserved for employees. The state would retain majority ownership under the current structure.
Government Wants Better Offers
The latest negotiations are expected to last several weeks. Portugal wants both bidders to improve their proposals before making a final choice.
The government said the decision will consider more than the financial value of the offers. Issues such as TAP's future strategy, international connectivity, investment in its fleet and the airline's role in Portugal's airport network will also be important.
The government formally approved a three-week negotiation stage with both Air France-KLM and Lufthansa.
Why TAP Is Attractive
TAP is strategically important because of its strong connections between Europe, Brazil, Portuguese-speaking African countries and the United States.
The airline's Lisbon hub also gives a potential strategic partner access to valuable airport slots and an established international network. Both Air France-KLM and Lufthansa see opportunities to strengthen their European networks through TAP.
For Portugal, bringing in a major international airline group could provide TAP with additional financial strength, operational expertise and opportunities to expand its global network.
Final Decision Still Ahead
Once the negotiation period ends, Portugal plans to select a single preferred bidder for the final stage of the transaction.
The government has indicated that the chosen investor could begin participating in TAP's joint management as early as 2026, while the actual capital injection is expected to take place in summer 2027.
The decision will ultimately determine which of Europe's major airline groups becomes TAP's strategic partner.
For now, both Air France-KLM and Lufthansa remain in contention, and Portugal is using the next few weeks to push for a stronger deal before choosing the airline that will help shape TAP's next chapter.
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