In the summer of 2025, the government of Portugal relaunched a project to privatize national carrier TAP Air Portugal, with the goal of selling a large stake within a year or so. All too often, not much comes of these kinds of projects, though it seems like this is moving along nicely.
In early April 2026, we learned how two major airline groups had submitted non-binding offers to invest in TAP. We now know that this is moving forward, as both airlines are being invited to make binding offers, so let’s cover all the details.
TAP Air Portugal privatization effort underway
Portugal’s government is currently working on an effort to privatize TAP Air Portugal, with the goal of selling a 44.9% stake, with the possibility to give up a majority stake over time. As part of this, employees would also be offered a 5% stake in the company (meaning that the government would own 50.1% of the company).
Last summer, Prime Minister Luis Montenegro stated that he’s “convinced that there will be many interested parties.” For years there has been talk of privatizing TAP, so this is only the latest such effort, and it’s anyone’s guess how this plays out.
The last round of privatization efforts stalled in early 2025, when the country’s center-right minority government collapsed. The coalition returned to power after a May 2025 election, but didn’t have a majority in parliament, potentially causing a sale to be blocked.
Historically, TAP hasn’t been a terribly profitable airline, but its performance has improved over time. In 2021, the airline reported a record €1.6 billion loss, following the coronavirus pandemic. This caused a restructuring, which saw the government invest €3.2 billion in the company.
The airline has returned to profitability in recent years, though we’re talking about fairly mild profits. The company’s profits over the past four reported years (2022-2025) have been €65.6 million, €177.3 million, €53.7 million, and €4.1 million.
In looking for a partner in this privatization, the government obviously hopes for as many synergies as possible, to improve the company’s long term prospect of profitability.
Last summer, Infrastructure Minister Miguel Pinto Luz stated that “we believe we can complete the privatization within a year,” emphasizing that even airlines from outside the European Union could express interest.
Air France-KLM & Lufthansa Group are in the running
While TAP Air Portugal isn’t independently some massively profitable airline, the company offers some significant synergies for other airline groups. Specifically, TAP has a strong network to Brazil, to Africa, and to the United States. This obviously holds significant strategic value for several airlines. For that matter, a large goal with acquisitions is simply to prevent competitors from getting in on the action instead.
We know that all three of the major European airline groups — Air France-KLM, IAG, and Lufthansa — had been interested in TAP Air Portugal at one point or another, primarily due to the carrier’s strength in Brazil, with the Africa network being a secondary strength.
The challenge is, it’s kind of hard to figure out how North America operations would complement the existing arrangements of airline groups. Obviously North America to Europe flying is heavily dominated by joint ventures (split by alliance, sort of), which have a lot of pricing power.
Historically, TAP has operated pretty independently to North America, often undercutting other carriers on price, with attractive fares in all cabins, including for one-way flights. Could we see TAP join one of the major joint ventures? Obviously it would totally change the carrier’s pricing model and market position.
Then there’s the whole issue of regulatory approval. Getting regulatory approval for such a deal will be no small task, given the number of parties that have to sign off on agreements like this, and the concessions required.
Several weeks ago, we learned how both Air France-KLM and Lufthansa Group submitted non-binding offers to invest in TAP. That makes sense, since both companies have a lot to gain from the airline in terms of their existing geography and networks.
Meanwhile IAG had shared that after “careful consideration,” it decided not to proceed with attempting to invest in TAP, instead focusing on growth opportunities within the existing group.
The government has now had time to review these offers, and both companies are advancing to the next round, as they’ve met the criteria. The expectation is that the two airline groups will now have 90 days to submit binding offers, and the government hopes to make a final decision on a deal in August or September 2026.
Obviously both airline groups are now trying to make their case for why they should be able to take over the airline. Air France-KLM CEO Ben Smith CEO recently (smartly) made the argument that a deal with the company would be more likely to result in labor peace, and it’s also what pilots at TAP have come out in favor of, given the mess that is Lufthansa Group labor relations.
Bottom line
The government of Portugal is looking to privatize TAP Air Portugal, initially hoping to sell a 44.9% stake (with an additional 5% going to employees), but the government is open to giving up majority control over time. While the goal of privatization has been there for a long time, this is now closer to becoming a reality.
Both Air France-KLM and Lufthansa Group have expressed interest in a deal with TAP, and their non-binding offers were reportedly similar. Now the airlines have 90 days to submit binding offers, and then the government is expected to make a decision in August or September 2026. I’m rooting for Air France-KLM over Lufthansa Group here, but we’ll see how this plays out.
How do you see TAP’s privatization plans evolving?
