Summary
- TAP Air Portugal has officially announced the privatization process, aiming to sell a controlling stake.
- Potential buyers include Lufthansa Group, Air France-KLM Group, IAG, and the Brazilian government, attracted by TAP’s Brazilian network.
- The Lufthansa Group appears to be the most rational fit on account of Star Alliance, but only time will reveal the end result of the privatization.
TAP Air Portugal has finally relaunched the privatization process, announcing yesterday it might sell a controlling stake within the airline.
Finally official
Financial problems have riddled TAP Air Portugal lately, influenced by, but not limited to the COVID-19 pandemic. The federal government has sold and repurchased stakes within the airline but now seeks to sell a controlling stake. While the privatization has been public knowledge for a while and has drawn interest from airlines and airline groups, it was finally approved yesterday by the cupboard.
“The content of the decree contemplates objectives for TAP growth, national hub growth, growth and employment throughout the aviation sector, higher utilisation of national airports and pricing.” – Fernando Medina, Minister of Finance, Portugal
The plan is to sell a controlling stake of 51% or greater and keep a strategic stake to protect the national interest at Humberto Delgado Airport (LIS). TAP has already drawn the interest of the Lufthansa Group, Air France-KLM Group, the International Airlines Group (IAG), and even the Brazilian government.
Photo: Lukas Souza | Easy Flying
Earlier this week, IAG’s CEO, Luis Gallego, stated the group continues to be occupied with a stake in TAP, highlighting the carrier’s network to Brazil and Africa as a major focal point.
“We’re all the time open to have great firms, brands in our portfolio. We wish to see the conditions of TAP privatisation, we expect it may very well be interesting for us.”
In February, Air France-KLM stated it remained occupied with TAP, also citing the airline’s Brazilian network as a degree of attraction. In March, Lufthansa Group CEO Carsten Spohr said the airline group’s primary interest was ITA Airways but was also considering acquiring a stake in TAP. Strictly taking a look at airline alliances, it might make essentially the most sense for TAP to be integrated into the Lufthansa Group due to Star Alliance. Nonetheless, only time will tell what’s going to occur with the Portuguese Airline.
A have a look at TAP’s Brazilian network
In response to data from Cirium, 2,203 flights are scheduled between Europe and Brazil in October. TAP has the biggest market share, with 685 flights, or 31.1%. The second-largest share belongs to LATAM Brasil, with 410 flights. Air France has the third-largest share, serving three Brazilian destinations: São Paulo, Rio de Janeiro, and Fortaleza.
TAP serves ten Brazilian destinations from Porto and Lisbon: Belém, Fortaleza, Natal, Salvador, Brasilia, Rio de Janeiro, São Paulo, Porto Alegre, Belo Horizonte, and Recife. The busiest route is from Lisbon to São Paulo, with three flights most days. Rio de Janeiro can be a busy route but has one flight on most days and sometimes a second.
Photo: Matheus Obst I Shutterstock
Using October’s flights, below is what each airline group’s route network would seem like to Brazil in the event that they acquired TAP:
- If acquired by the Lufthansa Group: 685 (TAP) + 99 (ITA) + 88 (Lufthansa) + 62 (SWISS) = 934 flights
- If acquired by the Air France-KLM Group: 685 (TAP) + 212 (Air France) + 124 (KLM) = 1,021 flights
- If acquired by IAG: 685 (TAP) + 107 (British Airways) + 92 (Iberia) = 884 flights
Using October’s routes, below is the variety of routes each group would serve in the event that they acquired TAP:
- If acquired by the Lufthansa Group: 12 (TAP) + 3 (Lufthansa) + 2 (ITA) + 1 (SWISS) = 18 routes
- If acquired by the Air France-KLM Group: 12 (TAP) + 3 (Air France) + 1 (KLM) = 16 routes
- If acquired by IAG: 12 (TAP) + 2 (British Airways) + 2 (Iberia) = 14 routes
Who do you think that will acquire the bulk stake in TAP? Why? Tell us within the comments below.