Lufthansa Group Wins Bid for 44.9% Stake in TAP Air Portugal

Lufthansa is set to become a major shareholder in TAP Air Portugal after winning a bidding contest for a 44.9 per cent stake in the Portuguese flag carrier, marking a significant step in the airline’s long-running privatization process.

The Portuguese government announced Wednesday (Oct. 14) that the German airline group had emerged victorious over rival Air France-KLM, the only other bidder in the race.

The transaction values the stake at approximately €1.2 billion (CAD1.91 billion), according to government officials.

Portuguese Prime Minister Luís Montenegro confirmed the decision, which will see the government retain majority ownership of TAP for now.

“This marks a new phase for TAP. It is a strategic partner for growth, with Lisbon serving as a hub and the Portuguese identity preserved,” said the government in a statement.

The government added that the deal would allow TAP to offer “greater scale and enhanced connectivity”, with Lufthansa responsible for executive and operational management of TAP.

An additional five per cent of the airline’s shares has been reserved for its more than 9,000 employees, giving staff an opportunity to participate in the ownership structure.

The deal remains subject to approval from European Union regulators.

Montenegro indicated that the government could complete the airline’s full privatization by 2028.

For Lufthansa, the investment represents an opportunity to strengthen its position in the European aviation market while gaining access to TAP’s extensive international network, particularly its valuable connections between Europe and Brazil.

TAP carried 16.7 million passengers last year and operates a fleet of more than 90 aircraft serving over 90 destinations worldwide.

The airline’s strong presence in Brazil, supported by longstanding commercial and cultural ties between the two countries, has been viewed as one of its most attractive assets for potential investors.

Despite its extensive international operations, TAP reported a relatively modest net profit of €4.1 million (US$4.6 million) last year, according to its financial statements.

Analysts have also cautioned that Lufthansa’s own financial struggles could complicate efforts to turn TAP around, particularly given the significant upfront investment required and the uncertainty surrounding potential returns.

The German airline group is working to restore investor confidence through a restructuring strategy aimed at streamlining operations and achieving an operating profit margin of eight to 10 per cent between 2028 and 2030.

Meanwhile, Lufthansa is still navigating the turnaround of Italy’s ITA Airways, adding another layer of complexity to its expansion plans.