Air France-KLM CEO Says He’s Interested in Portugal’s TAP

Albertina Torsoli
·3 min read
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(Bloomberg) -- Air France-KLM said it could be interested in taking a stake in Portuguese flag carrier TAP SA as the government in Lisbon seeks an industry backer for an airline it was forced to rescue during the coronavirus crisis.

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Chief Executive Officer Ben Smith said Friday that the Franco-Dutch group would “definitely engage on a formal basis” with a view to some sort of “partnership or ownership” should TAP, as Transportes Aereos Portugueses is known, become available.

“If the right circumstances are in place, we’re interested,” Smith told Bloomberg Television. “Consolidation is key for us, especially in Europe. The Iberian peninsula we’ve studied for many years.”

Portuguese Infrastructure Minister Pedro Nuno Santos said on Oct. 19 that TAP needed to combine with a “large aviation group” in order to be viable after suffering a net loss of 1.6 billion euros ($1.50 billion) last year. The government has provided the carrier with 2.55 billion euros in aid.

TAP’s chief attraction to potential airline investors lies in its services to Brazil, of which it’s the biggest European provider, though a previous sale in 2015 attracted little European interest, coming down to two Latin American bidders.

Portugal ultimately agreed to sell a 61% stake to a group led by Brazilian-American entrepreneur David Neeleman, the founder of JetBlue Airways Corp. and Brazilian carrier Azul. A left-leaning government subsequently reclaimed a majority holding before Neeleman exited altogether during the Covid pandemic.

Lufthansa, IAG

Deutsche Lufthansa AG, which owns former national carriers in Austria, Belgium and Switzerland, could be another interested party in a new sale of TAP after losing out in the bidding for Italian startup ITA Airways to a group led by US fund Certares Management and including Air France-KLM.

Still, Carsten Spohr, the German carrier’s CEO, said Oct. 14 that he wouldn’t be interested in assets unless a dominant stake was available and that ITA failed to meet that requirement. It’s not clear what size holding in TAP Portugal is looking to sell.

TAP said earlier this year a new investor would put it on a more solid footing as it pushes ahead with a restructuring program. Nuno Santos said in March that “several parties” had shown an interest.

IAG SA, Europe’s third major airline group and the parent of British Airways, is generally regarded as an unlikely suitor for TAP given that it also owns Spanish carrier Iberia, a close rival to the Portuguese firm.

IAG CEO Luis Gallego said separately Friday that the group remains interested in acquiring all of Spanish leisure operator Air Europa, up from 20% now, though any transaction could take another year.

Turkish Airlines last November denied that it was considering buying a stake in TAP after Portuguese newspaper Jornal de Negocios reported that it was looking at acquiring a holding.

--With assistance from Henrique Almeida, William Wilkes and Guy Johnson.

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