Air France-KLM seeks stake in TAP as Portugal moves to privatize airline

Air France-KLM has confirmed its intention to participate in the privatization of TAP Air Portugal, marking a significant step in the restructuring of the state-owned airline. The Franco-Dutch airline group considers Portugal a “strategic market” and is prepared to submit a formal bid.

“Air France-KLM stands ready to present its candidacy as part of the TAP privatization process,” CEO Ben Smith said during a visit to Portugal. He praised TAP as “an emblematic company which has built a powerful hub in Lisbon that is open to the world.”

The Portuguese government, which renationalized TAP in 2020 during the COVID-19 crisis, injected 3.2 billion euros into the airline as part of a restructuring plan. Now, officials are moving forward with a partial privatization, aiming to sell at least 49 percent of the company.

Air France-KLM is not the only contender. Germany’s Lufthansa and the International Airlines Group (IAG), which owns British Airways and Iberia, have also expressed interest. In total, about a dozen entities, including non-European investors, have reportedly engaged in discussions with the Portuguese government.

Macron, who visited Portugal this week alongside Smith, emphasized the strong ties between the two nations and backed Air France-KLM’s bid. “We want Air France and TAP to find an innovative form of marriage,” he said during a business forum in Porto.

Smith echoed that sentiment, emphasizing Air France-KLM’s commitment to maintaining TAP’s operations in Lisbon. “We wish to preserve and develop TAP’s strong brand and valuable hub, which is a key link between Europe, Brazil, and Africa,” he said.

TAP’s strategic importance

TAP reportedly holds a unique position in the European aviation market, particularly due to its dominance in air travel between Europe and Brazil. The airline transported more than 16 million passengers in 2024, an increase of 1.6 percent from the previous year, driven largely by demand on transatlantic routes to Brazil and the United States.

French Transport Minister Philippe Tabarot highlighted TAP’s critical role in European connectivity. “Over the past 10 years, traffic between our countries has more than doubled,” he wrote on X. “We must work together to maximize the geographical advantages of our two nations, linking Europe to the rest of the world.”

Air France-KLM has been expanding its investments in European airlines. In 2024, it acquired a 20 percent stake in Scandinavian carrier SAS, positioning itself as a major player in regional aviation. The group is also accustomed to managing state-backed shareholders, with the French and Dutch governments both holding stakes in the airline.

Air France has operated in Portugal since 1940 and reportedly sees the country as a priority market. The airline group controls nearly 45 percent of the France-Portugal air travel market, with its subsidiary Transavia France operating a significant portion of those routes.

Air France, KLM, and Transavia together operate nearly 700 weekly flights to and from Portugal, connecting the country to global hubs in Paris-Charles de Gaulle and Amsterdam-Schiphol.

In 2024, Air France-KLM transported 4.5 million passengers to and from Portugal, a 40 percent increase compared to 2019. The group plans to expand its operations further in 2025, increasing its capacity by 10 percent across its network.

The Portuguese government had initially considered selling 100 percent of TAP but later signaled a preference for privatizing only 49 percent of the airline. Negotiations are expected to continue through 2025, with a final decision anticipated by early 2026.

According to local media, Lisbon is considering a phased approach, with an initial sale of a minority stake followed by a gradual transfer of ownership. Air France-KLM’s ability to meet Lisbon’s conditions—preserving TAP’s brand and Lisbon hub—could prove decisive in its bid.