Lufthansa, Air France-KLM Submit Bids for Portugal’s TAP
Deutsche Lufthansa AG and Air France-KLM submitted binding offers for a minority stake in Portugal’s state-owned airline TAP SA, setting up a competition between the two aviation groups for a sought-after asset that provides access to markets like Latin America.
The bids for one of Europe’s last mid-sized airlines still on the market were lodged on Wednesday, the final day of the deadline, Portuguese state holding company Parpública said, confirming an earlier report by Bloomberg News.
“Parpública will now assess the proposals and submit a report to the government within 30 days,” it said in a statement.
The government plans to sell as much as 49.9% of TAP, with a 5% tranche initially reserved for employees.
Both companies emphasized their intention to expand TAP and invest in the business.
Air France-KLM’s “goal is to ensure long-term growth for TAP, not only in Lisbon but also in Porto and other cities in Portugal,” Chief Executive Officer Ben Smith said in a statement, adding that he wants to create a global aviation champion based in Europe.
Lufthansa CEO Carsten Spohr said he wants to” strengthen Portugal’s national airline as part of the Lufthansa Group and as the leading airline for the south Atlantic, with Lisbon as a strategic hub.”
The offers move the process into its next phase, with the government expected to evaluate the proposals before deciding to pick a final bidder by early September, Infrastructure Minister Miguel Pinto Luz said on June 16.
TAP is considered attractive because of its extensive routes to Brazil and Africa, as well as the US and Canada. Buying a stake would help either Lufthansa or Air France-KLM strengthen their networks across the Atlantic and expand its presence in southern Europe.
Portuguese officials have argued that TAP, founded in 1945, needs to become part of a larger airline group to gain scale and secure its long-term future. The carrier has a fleet of 104 Airbus aircraft, according to its website.
Both bidders have enlarged their regional holdings over the years. Lufthansa most recently added ITA Airways to its stable of divisions, which also include Swiss, Austrian and Brussels Airlines. Air France-KLM owns a stake in Scandinavia’s SAS.
Whoever emerges on top will have to adhere to a list of requirements, which include retaining Lisbon as a hub and commitments on investment, connectivity and growth.
Source: bloomberg.com
Aleksei Andrievskii | Advisory Board Member, Bendura Bank AG | Liechtenstein