Portugal picks Lufthansa Group over Air France-KLM for TAP stake

Portugal will sell 44.9 percent of TAP Air Portugal to Lufthansa Group, ending a contest in which Air France-KLM was the other bidder. Prime Minister Luís Montenegro announced the decision in Lisbon on Wednesday, 14 October, after an extraordinary meeting of the Council of Ministers.

According to the newspaper Diario de Noticias, the government said Lufthansa's offer was 16 percent higher than Air France-KLM's and carried less uncertainty. The bid for TAP was valued at 2.552 billion euros in total: 1.201 billion euros in a first phase and 1.351 billion in a second. Montenegro said this was well above independent estimates made in recent years and even in recent months.

The second phase is due by 2028. Portugal would then receive 488 million euros in cash and could exchange its remaining TAP shares for Lufthansa stock. The state could become the second-largest shareholder in Lufthansa Group and receive dividends each year.

Montenegro said the government had completed the first phase of the airline's privatisation and described the process as careful and fully transparent. TAP could only be fit for the future, he said, if the company could grow and become more competitive. Lufthansa Group was the best choice for its future. The new owners take over management immediately, according to the report.