The Portuguese government’s long-anticipated privatization of flag carrier TAP air Portugal has entered a critical phase, with several major international airline groups submitting expressions of interest today. Air France-KLM, lufthansa, and International Airlines Group-the parent company of British Airways and Iberia-are all vying for a stake in the airline, which has been under state control since 2020 following a €1.2 billion bailout[[1]]. The process, which includes the potential sale of associated ground handling and maintenance units, is expected to take up to a year, pending regulatory approvals.
Air France-KLM, Lufthansa, and International Airlines Group (IAG), the parent company of British Airways and Iberia, have all formally expressed interest in acquiring a stake in TAP Air Portugal, according to sources familiar with the matter. The deadline for submitting expressions of interest via email closed at 4:59 PM local time today.
Parpública, the Portuguese state-owned enterprise responsible for managing state holdings, now has until December 12th to prepare a report evaluating the interested parties. This report will assess whether potential bidders meet specific criteria, including generating revenue exceeding €5 billion in at least one of the past three years, demonstrating proven experience in the aviation sector, possessing sufficient financial capacity, and maintaining a solid reputation.
Following this initial assessment, approved candidates will be invited to submit non-binding proposals within a maximum timeframe of 90 days. These proposals will need to detail the proposed acquisition price, how the necessary financing will be secured, and plans for investment in fleet renewal, maintenance, engineering, sustainable aviation fuels, and labor commitments. A strategic vision for potential future increases in ownership stake will also be required.
Parpública will then have 30 days to compile another report for submission to the Portuguese government after the non-binding proposals are received. This timeline may be extended if clarifications are requested from the bidders, pausing the clock until responses are provided.
The Council of Ministers will then select the most suitable candidates based on Parpública’s report and invite them to submit binding proposals in the third phase of the process, again with a maximum 90-day deadline. The Council of Ministers, however, reserves the right to shorten this timeframe in the invitation letter.
The third stage involves due diligence and the submission of binding proposals. Following this, Parpública will have 30 days to prepare a final report, a deadline that can be extended by the Council of Ministers with justification.
This final report will be used to select the best proposal, or potentially initiate a negotiation phase to refine and finalize the binding proposals. Once a selection is made, the Council of Ministers will approve the final sale contracts, which the buyer will be required to sign within 15 days.
Subsequently, a general assembly of TAP Air Portugal will be convened to approve the resolutions necessary to finalize the privatization and implement the agreed-upon industrial and strategic plan.
The Portuguese government initially estimated in July that the privatization process, which also includes Portugália, the TAP Healthcare Unit, Cateringpor, and SPdH (formerly Groundforce), would take approximately one year. However, the final timeline remains contingent on regulatory approvals. The move to privatize TAP reflects a broader trend of governments seeking to streamline national airlines and attract foreign investment.
The process envisions the sale of up to 44.9% of TAP’s capital, with 5% reserved for employees. Should the employee allocation not be fully subscribed, the winning bidder will have the right of first refusal.
