Portugal to Approve Decree on Privatization of Airline TAP in the Coming Weeks

Joao Lima
·2 min read

(Bloomberg) -- Portugal’s plan to sell off a chunk of state-owned airline TAP SA will move closer to fruition when the government sets out rules for the process in coming weeks, Finance Minister Fernando Medina said.

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“Growth of the company, expansion of activity, keeping the hub in Lisbon, protecting the brand and the operation of TAP are going to be the critical issues,” he said in an interview. A decree laying out a framework for the privatization of the 78-year-old carrier will be approved by the government in the next few weeks, according to Medina.

As well as taking growing numbers of international tourists to Portugal, TAP’s flights link a global diaspora of the country’s citizens and connect the mainland to the Madeira and Azores archipelagos in the middle of the Atlantic. The government will keep a stake in the airline after the privatization to ensure “strategic objectives” are met, including the goal of keeping Portugal as its main hub, Prime Minister Antonio Costa reiterated in March.

Portugal hired Ernst & Young and Banco Finantia SA to carry out valuations of TAP as part of the plan to sell a stake in the carrier, state holding company Parpublica said on July 4.

Larger airlines Air France-KLM, Deutsche Lufthansa AG and IAG SA, the parent company of British Airways and Iberia, have said they may look at TAP.

It won’t be the first time Portugal has sold a stake in TAP.

In 2015, the government agreed to sell 61% of the carrier to Atlantic Gateway, a company grouping investors including airline entrepreneur David Neeleman.

A few months later, Costa’s newly elected Socialist government partly reversed the airline’s privatization, increasing its holding to 50% from 34%. In 2020, the government agreed to buy Neeleman’s indirect stake in TAP and increased its holding to 72.5% before becoming the carrier’s sole owner in December 2021.

Like other airlines, TAP had to halt most of its operations due to the coronavirus outbreak and tapped rescue funding from the government. The European Commission in 2021 approved more than 2 billion euros ($2.2 billion) of restructuring aid for the carrier.

TAP said on Monday that it carried 7.6 million passengers in the first half, 30% more than in the same period of last year.

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