Europe’s three legacy airline groups interested in TAP’s privatization

As the Portuguese government prepares for the second privatization of the country’s flag carrier, TAP Air Portugal, the interested parties have already started to steer their way towards potential acquisitions.

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SAPO’s ECO, a major news website in Portugal, has revealed that International Airlines Group (IAG), the holding that owns British Airways, Iberia, Level and Vueling, has already picked a local communications agency, Cunha Vaz & Associados, as well as a law firm, Vieira de Almeida, «in a signal that it intends to join the race to a part in the airline».

ECO has also reported that the two other legacy airline groups in Europe, Air France-KLM and Lufthansa, are also interested in the privatization process of TAP.

TAP is one of the main targets of post-pandemic consolidation in Europe. After being rescued and renationalized in 2020, the national government intends to reprivatize it in the coming years. However, Prime Minister António Costa said, last week, that he «[could] not promise» the process would be over this year.

In March, Costa had also conceded that the government intended to retain a stake in TAP.

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For the airline groups, TAP would be interesting due to its already structured hub in Lisbon, particularly because of the airline’s strength as a connector between Europe and Latin America, particularly Brazil.

Lisbon’s Portela Airport, too, is highly slot constrained; this means TAP benefits from an advantageous position of leadership in the terminal, holding there just over half of departures.

Whichever airline group should take TAP, it would count with an important lead over the second-largest competitor, easyJet, with a fifth of the size to and from Lisbon — although the European Commission could mandate the dropping of some of these slots after the sale.