Portugal’s government has chosen Lufthansa as the preferred buyer for a 44.9% stake in TAP Air Portugal, valuing the deal at €1.2 billion ($1.3 billion) and opting for the German airline over rival Air France-KLM.
The decision marks a major step in the long-running effort to find a strategic partner for TAP, one of Europe’s remaining national carriers outside a major airline group. The process has faced repeated delays but now moves forward amid wider consolidation across the European aviation sector.
Industry analysts expect consolidation to gain momentum as rising jet fuel costs linked to the war in Iran place additional financial pressure on airlines, encouraging smaller carriers to seek support from larger, better-capitalised groups.
Lufthansa, which already owns Austrian Airlines, ITA Airways and SWISS, among other carriers, secured the selection after both bidders submitted improved final offers in late September.
Aviation analyst John Strickland said the acquisition would give Lufthansa another hub and extend its reach into southwestern Europe and other markets where the group has had a more limited presence.
Lisbon Hub and Global Connections
TAP’s appeal lies largely in its valuable landing slots and its network connecting Lisbon with Brazil, Portuguese-speaking African countries and the United States. These routes support Portugal’s diaspora links, tourism industry and international investment relationships.
Prime Minister Luis Montenegro told reporters that Lufthansa’s offer was 16% higher than the bid submitted by Air France-KLM.
Before the announcement, TAP Chief Executive Luis Rodrigues said at the World Aviation Festival in Lisbon that joining a larger airline group would enable the Portuguese carrier to access a wider range of resources at better value.
The government said its decision considered both the financial offers and the bidders’ industrial plans, including their strategies for TAP’s growth and long-term sustainability.
Portugal also wants its chosen partner to strengthen connectivity across the country, extending operations beyond Lisbon to Porto, Faro, the Azores and Madeira.
Infrastructure Minister Miguel Pinto Luz said Lufthansa Group had committed to increasing TAP’s fleet by a further 117 aircraft by 2035, followed by another 130 aircraft after 2035, when Lisbon’s new airport is expected to become operational.
As of June 2026, TAP operated 101 aircraft serving 93 destinations worldwide. Its network included 52 destinations in Europe, 16 in South and Central America, 14 in Africa and 11 in North America.
The airline carried a record 8.2 million passengers in the first half of 2026, an increase of 4.2% year on year. Operating revenue rose 4.3% over the same period.
Financial Challenges Remain
Lufthansa’s own financial performance could complicate efforts to turn around TAP, analysts warned. Integrating an airline requires significant upfront investment, and the expected returns are not always assured.
Strickland said Lufthansa continued to face financial difficulties, with its core Deutsche Lufthansa Airlines business still losing money. He argued that the group needed to address its own operational and financial challenges.
Lufthansa has pledged to achieve an operating profit margin of 8% to 10% between 2028 and 2030. Its strategy includes simplifying and centralising operations to restore investor confidence.
The integration of Italy’s ITA Airways also remains a work in progress, Strickland said. Investors and analysts have previously raised concerns about the complexity of Lufthansa’s geographically dispersed network and the challenges of managing multiple airlines within one group.
Source: Gulf Times