Lufthansa Group has confirmed its position as the preferred partner of the Portuguese government for the reprivatisation of TAP Air Portugal. The decision places the German airline group ahead of Air France-KLM on the strength of both the financial offer and the wider package of commitments presented.
Carsten Spohr, Chairman of the Executive Board and Chief Executive Officer of Deutsche Lufthansa AG, welcomed the outcome with clear enthusiasm. He described TAP Air Portugal as a strong and profitable airline, a long-standing partner within Star Alliance, and a carrier with an established record of success on South Atlantic routes.
Spohr pointed to the airline’s outstanding employees and compelling business model, adding that the government’s choice opens the way for TAP Air Portugal to continue its success story in partnership with Lufthansa Group while allowing the German group to advance its internationalisation strategy and reinforce its standing in the South Atlantic market.
Lufthansa Group has offered a purchase price of €1.025 billion for a 44.9 per cent stake. That figure may rise to as much as €1.2 billion should the group take up any of the five per cent of shares initially reserved for employees. The transaction remains subject to the finalisation of documents with the Portuguese government and Parpública, the state’s holding company, and to the necessary regulatory approvals.
Completion of this first phase is anticipated in the first half of 2028. Separate discussions are already under way concerning a possible second phase in which Lufthansa Group would acquire the remaining 50.1 per cent and move to majority ownership. Lufthansa Group’s finance chief, Till Streichert, has revealed that the Portuguese government could in that second phase become a shareholder in Lufthansa Group itself with a stake of up to five per cent. Streichert expects the initial phase to generate annual synergy benefits of €450m.
Not just price
The selection of Lufthansa Group rests on more than price alone. The group has maintained a presence in Portugal for more than seventy years. Its airlines currently operate 353 weekly flights to six Portuguese destinations, a capacity increase of seventy-five per cent relative to 2019 levels.
More than five hundred skilled professionals already work for Lufthansa Group companies in the country. The construction of a new Lufthansa Technik facility in Santa Maria da Feira near Porto, specialising in engine parts and aircraft components, will add further employment.
Ground was broken in June and the site is planned to support a workforce of seven hundred, taking the group’s direct jobs in Portugal beyond one thousand by 2030. Additional elements of the package include an aviation innovation and start-up hub in Aveiro, corporate and operational services within Portugal, and the assessment of a military aviation training school at Tancos that could involve investment of €500m and the creation of two hundred posts.
Up to eight Airbus A350-900 aircraft may join the TAP fleet after 2030. The proposal protects the TAP brand, the Lisbon headquarters and hub, and the development of operations at Porto.
Measured response
TAP Air Portugal itself has issued a measured but positive response. The airline welcomes Lufthansa Group as its future private shareholder and strategic partner. It has also expressed appreciation for the professionalism shown by Air France-KLM throughout the process. TAP notes that the future acquisition of a stake by Lufthansa Group will allow the airline to draw on the scale and experience of a leading international group, thereby strengthening its development opportunities and market position.
The selected proposal provides for the preservation of the brand, the headquarters in Portugal and the Lisbon hub, the expansion of the fleet, the reinforcement of the Maintenance and Engineering division, and the development of operations in Porto.
In the transatlantic market TAP expects to benefit from integration into the A++ joint venture that already links Lufthansa Group with United Airlines and Air Canada. This step should enhance competitiveness and open further prospects for growth on North Atlantic routes. During the period leading to completion of the transaction TAP will continue to implement its 2026 to 2035 strategic plan while maintaining safety, service quality and operational reliability as priorities.
Decline of the independent airline
From the perspective of Lufthansa Group the acquisition of a minority stake in TAP represents a unique opportunity among the limited number of remaining European network carriers of meaningful scale. Lisbon functions as an advantaged hub, with Porto available as a strategic secondary base.
The network is diversified across Europe, South America and North America. TAP currently holds a twenty-six per cent market share on routes from Europe to Brazil and a forty-six per cent seat share at the capacity-constrained Lisbon airport. Its westernmost position within the European Union supports strong mid-point connectivity to both both South and North America. The fleet ranks among the youngest and most modern in the industry, with an average age of under ten years and more than seventy per cent next-generation aircraft.
State-of-the-art maintenance, repair and overhaul facilities, particularly those focused on CFM LEAP engines, form a further attraction. Passenger market shares on Europe to South America routes currently stand at twenty per cent for IAG, seventeen per cent for Air France-KLM, thirteen per cent for TAP, nine per cent for Lufthansa Group and eleven per cent for the Turkish Airlines and Air Europa grouping, with other carriers, mainly South American, accounting for the remaining thirty per cent.
The combination of Lufthansa Group and TAP would lift the joint share to twenty-one per cent. On Southern Europe to North America routes Lufthansa Group holds twelve per cent and TAP five per cent. Non-passenger activities, including cargo and maintenance, repair and overhaul, form part of the comprehensive strategic partnership.
Synergy savings
Synergies in the initial minority phase are projected to reach €450m annually on a net basis. These benefits will surface primarily within TAP through economies of scale, network optimisation and procurement efficiencies, yet a pre-agreed mechanism, modelled on arrangements developed during the integration of ITA Airways, will channel approximately seventy-five per cent of the financial gain to Lufthansa Group by way of dividends. Earnings per share for Lufthansa Group are expected to rise within the first twelve months after closing.
The Phase 1 investment will be funded entirely from existing cash reserves. Governance during the minority period will feature a board majority appointed by the Portuguese state and a minority of directors appointed by Lufthansa Group.
The executive committee and operational leadership will include appointments by Lufthansa Group, among them the right to nominate the chief executive officer.
The purchase price is based on the 2025 closing accounts and incorporates a 1.5 per cent annual ticking fee. Lufthansa Group’s shareholding may increase by up to five per cent through the acquisition of any unsubscribed employee shares.
AF’s Delta dimension
The Air France-KLM proposal, by comparison, placed greater emphasis on the immediate commercial involvement of its alliance partner Delta Air Lines. Delta was expected to begin negotiations promptly on reciprocal codeshare and loyalty benefits and to share best practices aimed at improving the customer experience.
The financial offer from Air France-KLM stood approximately €200m below that of Lufthansa Group and carried more conditions linked to TAP’s future results. While the Dutch-French group also undertook to protect the TAP brand, headquarters and Lisbon hub, the overall package presented by Lufthansa Group proved more comprehensive in the eyes of the Portuguese authorities.
Political considerations remain central to the process. The minority centre-right government requires parliamentary support from opposition parties to advance both phases of the reprivatisation.
Portuguese Finance Minister Joaquim Miranda Sarmento has described the Lufthansa Group proposal as an extraordinary opportunity for the company and for the national economy. He has indicated that the second phase could proceed by mid-2028, subject to further assessment.
Opposition parties, including the Socialist Party and Chega, have cautioned that discussion of full privatisation is premature. Portuguese unions have expressed a favourable view of the first phase. The government presentation suggests that Phase 2 would be initiated as a separate process once Phase 1 has closed.
5.6pc Irish owned
Lufthansa Group’s existing ownership structure provides additional context. At the end of 2025 German shareholders held 72.7 per cent of Deutsche Lufthansa AG, with United States investors accounting for 11.7 per cent, Irish holders 5.6 per cent, Luxembourg holders 2.6 per cent and other nationalities the remaining 7.4 per cent.
The largest individual shareholder remains Kühne Aviation GmbH, associated with the estate of Klaus-Michael Kühne, with a stake of between fifteen and twenty per cent. Six international investment companies each hold one per cent or more, collectively representing around fifteen per cent.
The group has signalled a strategic desire to reduce its reliance on the German market. Previous acquisitions of Austrian Airlines, Brussels Airlines, Swiss International Air Lines and the ongoing integration of ITA Airways have expanded its European footprint, yet the TAP transaction involves less route overlap and is expected to encounter a smoother regulatory path as a result. This is the first occasion on which Lufthansa Group has moved to acquire a profitable airline rather than a carrier requiring substantial restructuring.
The combination of Lisbon’s geographic advantage, TAP’s established strength on South Atlantic routes, a modern fleet and complementary maintenance capabilities creates a coherent industrial logic. Integration into the existing transatlantic joint venture will extend network reach for both parties. Cargo and maintenance, repair and overhaul activities offer additional avenues for value creation beyond passenger traffic.
The employment commitments, including the Santa Maria da Feira facility and potential training initiatives, address domestic Portuguese priorities and help to secure political and social acceptance. At the same time the structure of the transaction, with its phased approach, qualified governance arrangements and pre-agreed synergy-sharing mechanism, seeks to balance the interests of the Portuguese state, TAP’s workforce and Lufthansa Group’s shareholders.
Regulatory clearance
Execution risk remains present. Regulatory clearance from European and other competition authorities must still be obtained. Finalisation of detailed transaction documents and the successful placement of employee shares form further conditions.
The second phase, involving a majority stake and a possible reciprocal shareholding for the Portuguese government in Lufthansa Group, will require a fresh political mandate and market conditions that support the additional consideration of €1.3 billion. Should the first phase proceed as planned, the resulting platform would position the combined group more firmly across both the North and South Atlantic while reinforcing Lisbon as a competitive European gateway.
The case rests on the alignment of network strengths, the quantifiable synergy potential, the modest degree of overlap with existing Lufthansa Group subsidiaries, and the broader strategic objective of geographic diversification away from an over-concentration on the German market.
The Portuguese government’s choice of partner reflects a calculation that these elements together offer the most robust path for TAP Air Portugal’s continued development and for the wider economic contribution of the aviation sector within Portugal.
