Lufthansa is discussing a potential takeover of TAP Air Portugal's remaining 50.1% government-owned stake, opening the possibility of majority control after the German airline group was selected as the preferred investor in the Portuguese carrier's privatization.
Lufthansa Chief Financial Officer Till Streichert confirmed the separate negotiations on October 15, 2026, according to Reuters reporting. The discussions could result in Portugal receiving a stake of up to 5% in Lufthansa Group as part of a broader transaction.
Portugal selected Lufthansa on October 14 to acquire an initial minority holding of up to 49.9% in TAP for approximately €1.2 billion. However, neither the initial investment nor the proposed full takeover has been completed, and the second phase remains subject to further negotiations and approvals.
How Lufthansa's Two-Stage TAP Deal Would Work
The first phase would give Lufthansa an initial 44.9% stake in TAP for €1.025 billion. According to Lufthansa's October 14 announcement, the investment could increase to as much as 49.9% for up to €1.2 billion, depending partly on the allocation of shares reserved for employees and an additional time-related payment.
Up to 5% of TAP's shares are initially reserved for employees. Lufthansa could acquire shares that workers do not take up, potentially increasing its minority investment. Portugal would retain its 50.1% majority stake during this initial phase.
The proposed second stage is a separate transaction involving that remaining government holding. Acquiring it would give Lufthansa majority ownership and potentially nearly all of TAP, although any employee shareholding would affect its final ownership percentage.
This distinction matters because the government's selection of Lufthansa as the preferred investor does not mean the German group has already secured full ownership or completed either acquisition.
What Portugal Could Receive From the Sale
Portugal's government has outlined a potential second-stage transaction worth approximately €1.351 billion. The proposal includes €863 million in cash and an exchange of shares valued at €488 million, equivalent to a proposed 5% holding in the combined Lufthansa Group.
Unlike a straightforward cash sale, the proposed structure would allow Portugal to retain an economic interest in the wider airline group after relinquishing its controlling stake in TAP.
That potential Lufthansa shareholding is separate from the 5% of TAP shares initially reserved for TAP employees.
The Portuguese government's transaction announcement also projects that sale proceeds, future dividends and possible share appreciation could recover approximately €3.4 billion by 2040. The government has cited more than €3.2 billion in previous public investment in TAP.
Those projected recoveries are conditional, not guaranteed. They depend on the second phase proceeding, future company performance and the value of Portugal's prospective Lufthansa investment.
Why TAP Matters to Lufthansa's Expansion
TAP's extensive connections between Europe, Brazil and other South Atlantic destinations make the Portuguese carrier strategically attractive to Lufthansa. Its Lisbon hub offers access to markets that complement the German group's existing European and international networks.
Lufthansa already operates several European airlines, including SWISS, Austrian Airlines and ITA Airways. Adding TAP could expand its network reach and improve connections across participating airlines.
In its official statement, Lufthansa emphasized TAP's established South Atlantic position and its intention to preserve the Portuguese airline's national identity while strengthening international connectivity.
Streichert expects the investment to generate approximately €450 million in synergies, reflecting potential benefits from combining operations and commercial activities. This is a management forecast rather than savings already achieved.
The financial opportunity also carries execution risks. TAP recorded a net loss of approximately €99.2 million in the first half of 2026, compared with a €70.7 million loss a year earlier. Future profitability will depend on operating performance, costs and the effectiveness of any integration.
Political and Regulatory Obstacles Remain
Portugal's government supports a broader privatization, but selling its remaining majority stake would require additional political backing.
Finance Minister Joaquim Miranda Sarmento said opposition support would be needed for the second phase. The Socialist Party and Chega have indicated that discussing full privatization is premature, according to additional Reuters reporting.
European competition scrutiny presents another requirement. Regulators would need to assess the implications of Lufthansa expanding its airline holdings, including potential effects on competition and overlapping routes.
Lufthansa CEO Carsten Spohr has expressed confidence that the TAP transaction could face fewer competition concerns than the group's investment in ITA Airways because of the airlines' different network footprints. That assessment represents management's position, not a regulatory decision.
The Portuguese government has also emphasized commitments involving TAP's headquarters, brand, Lisbon hub, employment and future investment in Portugal. These commitments will be relevant as the parties finalize binding agreements.
What Happens Next for Lufthansa and TAP?
Portugal's government expects to complete the contractual process and sign documents for the initial investment by the end of 2026. Lufthansa has said it is working with the government and state holding company Parpública to finalize the transaction documentation.
Streichert has indicated that he expects the transaction process to close in the first half of 2028. Any subsequent takeover would depend on separate negotiations, political authorization and applicable regulatory approvals.
The immediate milestones are therefore the signing of definitive agreements for the minority investment, clarification of the second-phase ownership structure and progress toward obtaining the necessary approvals.
For Lufthansa, TAP represents an opportunity to expand its South Atlantic business. For Portugal, the central question is whether the potential financial returns, strategic commitments and retained investment in Lufthansa justify transferring control of its national airline. The proposed full takeover remains an opportunity under negotiation rather than a completed deal.
0 Comments