Lufthansa in talks for full ownership of TAP Air Portugal

Lufthansa Group is in discussions to acquire full ownership of TAP Air Portugal, a day after the Portuguese government selected the German airline group to purchase an initial minority stake in the carrier.

Lufthansa chief financial officer Till Streichert confirmed Thursday (Oct. 15) that separate discussions are underway over the government's remaining 50.1 per cent stake, according to Reuters. The potential acquisition would complete TAP's privatization, although no agreement has been reached on the second phase.

On Wednesday (Oct. 14), Portugal selected Lufthansa over Air France-KLM to acquire an initial 44.9 per cent stake in TAP for €1.025 billion. The Portuguese government said Lufthansa's financial offer was up to 16 per cent higher than its rival's.

An additional five per cent of TAP's shares are reserved for employees. If those shares are not purchased, Lufthansa could increase its holding to 49.9 per cent, bringing the first-stage transaction value to approximately €1.2 billion, including a fee linked to the transaction's timing.

Portugal would initially retain a 50.1 per cent majority stake, but the government has also disclosed Lufthansa's proposal to acquire the remaining shares for an additional €1.351 billion.

The proposed second-stage consideration comprises €863 million in cash and a five per cent shareholding in the combined Lufthansa-TAP group, valued at €488 million. According to the Portuguese government, the arrangement would make Portugal the second-largest shareholder in the combined group.

Together, the two proposed stages represent a direct valuation of approximately €2.55 billion, although the second phase would require a separate decision and agreement.

Government seeks support for second phase

Portuguese Finance Minister Joaquim Miranda Sarmento expressed support for completing TAP's privatization during an interview with public broadcaster RTP on Wednesday evening.

Sarmento described full privatization as an important opportunity for the airline and Portugal's economy, citing the potential for additional investment, business growth and employment.

According to Reuters, the government is seeking parliamentary support to proceed with the second phase. The opposition Socialist Party has called discussions about full privatization premature, while Chega has said it wants to examine the terms before deciding whether to support the proposal.

The government's proposal assumes the second stage could be completed by July 2028, subject to the necessary decisions and approvals.

What Lufthansa has planned for TAP

Beyond the ownership changes, Lufthansa's proposal outlines plans to expand TAP's operations and strengthen its position in the South Atlantic market, particularly its established connections to Brazil and other Latin American destinations.

During an investor call Thursday, Lufthansa Group said it expects annual synergies of up to €450 million from the combination, through potential cost savings and additional revenue opportunities.

According to the Portuguese government, Lufthansa's proposal would expand TAP's fleet to 117 aircraft by 2035 and potentially 130 thereafter, supported by an estimated €3 billion to €4 billion in fleet investment.

The plan also calls for maintaining TAP's brand and headquarters in Portugal, strengthening its Lisbon hub and expanding operations in Porto, where eight aircraft would be based. Connections to Portugal's island regions would also be maintained.

Additional investments are planned in aviation maintenance, engineering and training facilities in Portugal.

Although Portugal would initially retain majority ownership, Lufthansa would assume responsibility for TAP's executive and operational management under the proposed arrangement.

The initial acquisition is expected to close in the first half of 2028, subject to regulatory approval. Full ownership remains a longer-term possibility, with the next step depending on whether Lufthansa and the Portuguese government can secure agreement on the second phase.

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