Air France-KLM, Lufthansa move ahead in TAP sale

Air France-KLM and Lufthansa are expected to be invited to submit binding bids in the privatisation of TAP, narrowing the sale of a strategic stake in Portugal’s flag carrier to two European airline groups, according to Bloomberg. The formal invitation could be approved at Thursday’s cabinet meeting, after a report by Parpública recommended that both move to the next phase.

The two groups were the only bidders to submit non-binding offers by the April 2 deadline for the acquisition of 44.9% of TAP, plus a further 5% reserved for workers. Parpública had 30 days to send its assessment to the government, but did not use the full period.

Under the tender rules, the shortlisted bidders will have 60 days to submit binding offers once they receive the formal invitation. At that stage, they may gain access to more detailed information on the airline through the due diligence process.

IAG, owner of Iberia and British Airways, stayed out of the race despite having the strongest financial firepower among the potential bidders. The group said it had concluded that pursuing the deal was not in the best interests of its shareholders and reiterated that any acquisition process would need to offer a path to full ownership so it could manage and transform the business.

The Portuguese government is therefore pressing ahead with the privatisation despite tougher conditions in the aviation sector, with jet fuel shortages and higher prices triggering flight cancellations and weighing on airlines’ earnings.