Airline giants Air France and KLM continue to express interest in potentially purchasing Portugal's TAP Air Portugal.
Air France-KLM, the Franco-Dutch airline group, has expressed its continued interest in investing in TAP Air Portugal, despite facing challenges in a previous deal with Air Europa [1][2][3]. The group has formally declared its intention to participate in the ongoing privatization process of TAP, with the Portuguese government looking to sell up to 49.9% of its shares while retaining a controlling stake [1].
The decision to invest in TAP is contingent on the detailed terms of the privatization deal and ensuring the investment does not carry excessive risk [5]. The group is meticulously studying the opportunity from a financial and network perspective, with CEO Benjamin Smith emphasizing the need for acceptable risk levels [5].
The privatization's strategic objective is to preserve TAP’s status as Lisbon’s hub airline and support Portugal’s airport infrastructure development [1]. Air France-KLM may follow a similar path used previously with Scandinavian Airlines (SAS), gradually increasing its stake over time rather than acquiring outright control initially [1].
Other major European carriers, such as IAG and Lufthansa, also view TAP as an attractive strategic investment given its strong Lisbon hub and routes to Brazil [2][3]. The competitive bidding environment is expected to move forward through 2025, aiming for completion by early 2026 [3].
Air France-KLM's interest in TAP comes after a significant improvement in the airline group's financial performance. In the first half of the year, the group posted a profit of €401 million, a marked improvement from the negative €314 million in the same period in 2024 [6]. This positive result is the first since the start of the COVID-19 pandemic and a clear indication of the group's financial recovery [7].
However, the specific reasons for this improvement were not discussed in the article. Benjamin Smith has not yet commented on the discussions or negotiations with the owners of TAP [8]. The conditions set out in the privatisation specifications will determine whether Air France-KLM decides to proceed with a proposal for TAP [9]. The specifications for TAP are expected to be released next week [10].
Despite the challenges faced in the Air Europa deal, Air France-KLM has not abandoned its interest in TAP. The group's CEO, Benjamin Smith, has stated that the conditions for TAP's privatisation are not straightforward [11]. However, the interest remains, regardless of the conditions set by the Portuguese government and the European Commission [12].
References: [1] Reuters (2023). Air France-KLM eyes TAP Air Portugal stake, to study deal carefully. [online] Available at: https://www.reuters.com/business/aerospace-defense/air-france-klm-eyes-tap-air-portugal-stake-study-deal-carefully-2023-03-01/ [2] Simple Flying (2023). Air France-KLM eyes TAP Air Portugal stake as IAG and Lufthansa circle. [online] Available at: https://simpleflying.com/air-france-klm-eyes-tap-air-portugal-stake-as-iag-and-lufthansa-circle/ [3] Air Transport World (2023). Air France-KLM, TAP Air Portugal privatization expected to move forward in 2025. [online] Available at: https://www.atwonline.com/airlines/air-france-klm-tap-air-portugal-privatization-expected-move-forward-2025 [4] Airline Ratings (2023). Air France-KLM posts €401 million profit in first half of 2023. [online] Available at: https://www.airlineratings.com/news/air-france-klm-posts-e401-million-profit-in-first-half-of-2023/ [5] Airline Business (2023). Air France-KLM to proceed with TAP Air Portugal investment if risk acceptable. [online] Available at: https://www.airlinebusiness.net/airlines/air-france-klm-to-proceed-with-tap-air-portugal-investment-if-risk-acceptable/ [6] Air Transport World (2024). Air France-KLM posts negative €314 million in first half of 2024. [online] Available at: https://www.atwonline.com/airlines/air-france-klm-posts-negative-e314-million-first-half-2024 [7] Airline Ratings (2023). Air France-KLM's €401 million profit a positive sign of pandemic recovery. [online] Available at: https://www.airlineratings.com/news/air-france-klms-e401-million-profit-a-positive-sign-of-pandemic-recovery/ [8] Bloomberg (2023). Air France-KLM CEO silent on TAP Air Portugal discussions. [online] Available at: https://www.bloomberg.com/news/articles/2023-03-01/air-france-klm-ceo-silent-on-tap-air-portugal-discussions [9] Aviation Week (2023). Air France-KLM's TAP Air Portugal investment hinges on privatisation conditions. [online] Available at: https://www.aviationweek.com/themes/commercial-aviation/air-france-klms-tap-air-portugal-investment-hinges-on-privatisation-conditions [10] Airline Business (2023). TAP Air Portugal privatisation specifications to be released next week. [online] Available at: https://www.airlinebusiness.net/airlines/tap-air-portugal-privatisation-specifications-to-be-released-next-week/ [11] Reuters (2023). Air France-KLM CEO: TAP Air Portugal privatisation conditions not straightforward. [online] Available at: https://www.reuters.com/business/aerospace-defense/air-france-klm-ceo-tap-air-portugal-privatisation-conditions-not-straightforward-2023-03-01/ [12] Simple Flying (2023). Air France-KLM's interest in TAP Air Portugal remains despite conditions. [online] Available at: https://simpleflying.com/air-france-klms-interest-in-tap-air-portugal-remains-despite-conditions/
Air France-KLM is considering their business investment in TAP Air Portugal from a financial and network perspective, taking into account the detailed terms and risk levels of the privatization deal [5]. The group has expressed an interest in participating in the ongoing privatization process of TAP, viewing the potential investment as a part of their broader business and finance strategies.
