Air France-KLM and Lufthansa presented their binding offers this Wednesday to acquire 44.9% of the Portuguese airline TAP, according to Parpública, the state company responsible for managing its partial privatization. The proposals arrived on the last day of the deadline and open the phase in which the price, the industrial project, and the strategic commitments of the two only candidates remaining in the race will be compared.
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The two groups were the only ones continuing in the process after having submitted non-binding offers on April 2 and after the withdrawal of International Airlines Group (IAG), parent company of Iberia and British Airways. The procedure approved by the Portuguese Government contemplates the sale of up to 49.9% of TAP, while the State will initially retain at least 50.1% of its capital. Although the companies bidding for this stake have not disclosed their financial offers, Bernstein analysts, cited by Reuters, valued the 44.9% stake in TAP at around 700 million euros (798 million dollars), based on a valuation of 1.5 billion euros for the entire airline. Neither the Government nor the airlines revealed the value of the binding offers.
Air France-KLM confirmed that it has submitted a binding offer to acquire between 44.9% and 49.9% of TAP Air Portugal, without revealing the proposed amount. Delta Air Lines, Air France-KLM’s partner in their transatlantic joint venture, supports and is aligned with this offer. According to the French company, the American “shares the ambition to continue strengthening Portugal’s connectivity, especially in the North Atlantic market.”
The process initially reserves 44.9% for the strategic investor and up to 5% for the workers, but allows the selected buyer to acquire the shares not subscribed by the employees, which explains the maximum limit of 49.9% included in the Franco-Dutch offer.
According to Air France-KLM, its proposal is supported by a strategic plan that covers all business areas, including passenger transport, cargo, the loyalty program, and aircraft maintenance, repair, and overhaul.
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It also considers the networks of TAP, Air France, and KLM complementary, particularly in connections with Brazil, the rest of America, and Africa, and has promised to develop connectivity from other Portuguese cities, including Porto.
For its part, Lufthansa has also not disclosed economic terms or the specific commitments included in its binding offer. Over the past months, the German group has presented as one of its main credentials its experience in integrating national airlines while preserving their brands and operational centers.
In fact, Lufthansa integrates companies such as Swiss, Austrian Airlines, and Brussels Airlines and recently acquired a 41% stake in the Italian ITA Airways. For this reason, the German company has insisted that, as the largest airline group outside the United States, it could provide TAP with “the scale, experience, and financial stability needed,” referring to its track record in developing the aforementioned airlines while maintaining their national brands.
The Portuguese Government demands guarantees regarding the continuity of the TAP brand, its headquarters in Portugal, the Lisbon hub, and the routes strategic for the economy and for Portuguese communities abroad. The Minister of Infrastructure, Miguel Pinto Luz, has insisted that the choice will not depend exclusively on the price, but also on the industrial project, connectivity, and each candidate’s contribution to the country’s strategic interests.
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