Lufthansa Beats Air France-KLM in the Race for TAP Air Portugal
- Portugal selects the German airline group for a strategic minority stake in its national carrier, with financial strength, alliance compatibility and long-term network opportunities shaping the contest.
Lisbon, 14 October 2026 — Portugal has selected Lufthansa Group as its preferred partner for the partial privatisation of TAP Air Portugal, ending a closely watched contest with Air France-KLM. The decision offers Lufthansa an opportunity to strengthen its position in Southern Europe and expand its reach across the South Atlantic.
According to Portuguese business newspaper Jornal Económico, Lufthansa submitted a financially stronger proposal, offering €1.201 billion compared with €1.038 billion from Air France-KLM—a difference of €163 million, or approximately 16%. The newspaper also reported that the government considered potential long-term financial returns, although these partly depend on future share prices and dividend payments.
The proposals also differed in structure. According to Portuguese financial newspaper ECO, Lufthansa opted for an all-cash offer, whereas Air France-KLM had considered a structure potentially involving an exchange of its own shares. Such an arrangement would have exposed Portugal to fluctuations in the French-Dutch group’s share price.
The government’s framework allows the sale of up to 49.9% of TAP. Lufthansa was selected for a proposed 44.9% stake, with 5% reserved for employees, while the Portuguese state would retain majority ownership. The transaction remains subject to contractual negotiations and regulatory approvals.
A Strategic Asset at the Crossroads of Europe, Africa and the Americas
TAP is more than Portugal’s flag carrier. Its Lisbon hub provides an important gateway between Europe, Brazil, Portuguese-speaking African countries and North America, capitalising on Portugal’s historical, commercial and cultural ties with these markets.
The government’s privatisation priorities include strengthening international connectivity, expanding operations at airports outside Lisbon, investing in the fleet, developing maintenance and engineering activities, and supporting long-term growth.
For either bidder, TAP represents an opportunity to gain access to an established transatlantic network, additional connecting traffic and a strategically positioned European hub.
Why Lufthansa Was Selected
The Star Alliance Advantage
Lufthansa and TAP are both members of Star Alliance, whereas Air France-KLM belongs to SkyTeam. Jornal Económico identified this compatibility as a potential strategic advantage for Lufthansa.
Maintaining TAP within its existing alliance could facilitate cooperation on schedules, connecting itineraries, corporate sales and frequent-flyer benefits. By contrast, a partnership with Air France-KLM could have raised questions about TAP’s long-term alliance membership, although a switch to SkyTeam would not necessarily have been automatic.
Combined with the higher reported financial offer and cash-only structure, this existing relationship strengthened Lufthansa’s strategic proposition.
What Air France-KLM Offered — and Why It Fell Short
In its binding offer announced on 29 July 2026, Air France-KLM presented an industrial strategy covering passenger transport, cargo, loyalty programmes and Maintenance, Repair and Overhaul (MRO). The group also outlined plans to support TAP’s development while preserving its brand, management, headquarters and Lisbon hub, alongside opportunities to develop maintenance activities through TAP Maintenance & Engineering.
Portuguese reporting highlighted two further considerations. First, Air France-KLM’s experience operating alongside public-sector shareholders—the French and Dutch states are shareholders in the group—could be an advantage in a transaction where Portugal would retain majority ownership. Second, the group maintained substantial financial and operational capabilities despite pressure from higher fuel costs.
However, the reported €163 million difference between the bids, Lufthansa’s cash-only proposal and the existing Star Alliance relationship helped distinguish the German group’s offer.
Air France-KLM’s selection defeat does not establish that its industrial plan was inferior in every respect. Rather, the reported decision suggests that financial value and strategic compatibility carried significant weight in the government’s assessment.
TAP’s Fleet and Network Scale
TAP’s fleet supports short-, medium- and long-haul operations, underpinning its role as a major link between Europe and the South Atlantic.
According to Reuters, TAP operated 101 aircraft and served 93 destinations as of June 2026, carrying 8.2 million passengers in the first half of the year. Its fleet includes Airbus A320-family aircraft for shorter routes, A330neo widebodies and long-range A321 variants, alongside regional operations through TAP Express.
For Lufthansa, the investment offers an opportunity to connect TAP’s network with its broader European and global operations, strengthening access to Brazil and other South Atlantic markets.
For Air France-KLM, TAP would have provided comparable opportunities through Paris-Charles de Gaulle and Amsterdam Schiphol, complementing its transatlantic partnership with Delta Air Lines. It would also have expanded the group’s presence in the Iberian market and offered potential MRO opportunities.
These benefits remain prospective: ownership alone does not guarantee additional routes, fleet growth or operational integration. Outcomes will depend on investment decisions, commercial agreements and regulatory conditions.
The Scale of the Competing Groups
The bidders’ fleet sizes illustrate their respective industrial resources, although group-wide totals are not directly comparable with TAP’s fleet because of differences in reporting periods and subsidiary coverage.
Lufthansa Group reported a fleet of 737 aircraft at the end of 2025, spanning its mainline and regional operations, including SWISS, Austrian Airlines, Brussels Airlines and Eurowings.
Air France-KLM reported 596 aircraft at 31 December 2025, including 189 long-haul aircraft, 300 medium-haul aircraft, 101 regional aircraft and six freighters. Its operations include Air France, KLM, Transavia and HOP!.
What Happens Next?
Lufthansa’s selection marks a significant milestone in TAP’s privatisation, but the transaction still requires contractual finalisation and regulatory clearance.
For Portugal, the challenge is to secure investment and international connectivity while safeguarding national economic interests. For Lufthansa, TAP offers a strategically positioned gateway to Brazil, Africa and the wider Atlantic market. For Air France-KLM, the outcome represents a missed opportunity to expand its Iberian footprint and strengthen its transatlantic network.
Ultimately, the contest was about more than the price of a minority stake. It concerned TAP’s future position in Europe’s airline industry and the balance between financial returns, alliance connectivity and long-term strategic development.
Source: AeroMorning
