Air France-KLM CEO Confirms Interest to Acquire TAP Air Portugal

The CEO of Air France-KLM confirmed last week that the airline group has proposed a bid to acquire TAP Air Portugal in a move that promises to invest in the Portuguese economy and boost connectivity to the country’s regional cities.

From Renationalization to Privatization

TAP Air Portugal was renationalized in 2020 as it struggled to stay afloat during the COVID-19 pandemic, with the Portuguese government since investing over €3 billion ($3.24 billion) in the airline to prevent it from folding. However, the conservative-leaning government has expressed its desire to privatize the airline, initially seeking total privatization but later suggesting it is open to a partial sale.

Photo: TAP Air Portugal, Airbus A321LR. Courtesy of TAP.

Air France-KLM announced its plans to acquire a stake in the Portuguese flag carrier during French President Emmanuel Macron’s state visit to Portugal. Acquiring a stake in TAP Air Portugal, whose primary market is connections between Portugal and Brazil, along with flights to other parts of South America, the U.S., and Africa, would allow Air France-KLM to strengthen its foothold in the transatlantic market, particularly between Europe and Latin America.

Major Airlines Competing for TAP Stake

The multinational airline group joins German flag carrier Lufthansa and the International Airlines Group (IAG)—the parent company of British Airways and Iberia—in expressing an interest in acquiring a stake in TAP Air Portugal.

“Air France-KLM is ready to present its project as part of TAP’s privatization process, a topic we have been following for a long time,” said Ben Smith, CEO of Air France-KLM. Macron said he “wants to find an innovative way to marry Air France and TAP.”

Photo: Ben Smith. Courtesy of Air France-KLM

Explaining his company’s plans, Smith called Portugal a “strategic market” for Air France-KLM and said that TAP Air Portugal is an “emblematic airline that has built a powerful hub in Lisbon, open to the world.”

Sharing his vision for TAP Air Portugal under Air France-KLM’s stewardship, Smith said it would “maintain and develop TAP’s strong brand and highly valuable hub, drawing on the expertise of the company’s staff,” and that the airline group would “strengthen the connectivity of the entire country, including secondary cities, and invest durably in the local economy.”

Future Alliances and Connectivity

Air France-KLM will face competition in its bid for a stake in TAP Air Portugal, with both the Lufthansa Group and IAG previously laying out their own plans.

The Lufthansa Group—which owns Lufthansa, SWISS, Austrian Airlines, Brussels Airlines, Eurowings, and its most recent acquisition, ITA Airways—reportedly wants to purchase a 19.9 percent share in TAP Air Portugal, while IAG—which owns British Airways, Iberia, Aer Lingus, and Vueling—has suggested it’s aiming for a majority stake in the Portuguese carrier.

Photo: Courtesy of Star Alliance

Should Air France-KLM take a controlling stake in TAP Air Portugal, the Portuguese airline will likely switch from Star Alliance to SkyTeam, as was the case with Scandinavian Airlines (SAS) last year. Meanwhile, should IAG succeed in its bid, TAP Air Portugal may switch to SkyTeam or remain a Star Alliance member if taken over by Lufthansa.