Portugal’s president vetoes the re-privatisation of TAP, which interests IAG, Air France and Lufthansa.

On 28 September, António Costa’s government approved a decree law to reprivatise at least 51%” of the state-controlled airline TAP, reserving “up to 5%” for workers. The airlines interested in this process are the Spanish-British group IAG – parent company of Iberia, British Airways and Vueling -, Lufthansa and Air France have expressed interest in the privatisation.

The Portuguese head of state asked the government, according to a statement released today, to clarify the state’s capacity to intervene in a strategic company such as TAP and requested transparency in the whole operation.

TAP is owned by the Portuguese state, which currently holds 100 % of the capital after increasing its position to save it after the damage suffered by the pandemic, and is currently under a restructuring plan.

A controversial re-privatisation

Following the veto announced by Rebelo de Sousa, the Portuguese prime minister issued a statement in which he expressed his concern about the rejection of the decree, and the issues raised by the head of state will be “duly considered”.

Last week, the Portuguese judiciary declared the collective dismissal of 124 airline workers illegal.

Meanwhile, on 24 October, TAP reported a total profit of 203.5 million euros for the first nine months of 2023, compared to a loss of 90.8 million euros for the same period in 2022.

These results represent the “highest” cumulative figure for the first nine months of 2023 since the data was published.

Why is TAP attractive to airlines?

TAP is attractive not because of Portugal, but because of its strong presence on routes to Brazil, and that is where IAG could bid for the airline in its aim to control transatlantic flights. With British Airways it controls the North, Canada and the United States; with Iberia and Air Europa, all of Latin America, from Mexico to Argentina, and with TAP it would put the icing on the cake with the Brazilian market.

The operation will not be easy, and even the Portuguese government does not believe that Iberia is the ideal partner. Moreover, there will be strong competition, because the Franco-Dutch consortium Air France-KLM has also openly shown its interest in TAP, especially for routes to Brazil, and also Germany’s Lufthansa.