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The stalled privatization of TAP Air Portugal

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The Portuguese government has announced its intention to privatise the state-owned airline TAP Air Portugal in the first half of 2025. This move follows a series of discussions with potential investors and airlines to understand their interests and objectives in investing in the airline.

Prime Minister Luís Montenegro stressed that the sale would only proceed when the intentions of market participants were clear, while Infrastructure Minister Hugo Espírito Santo stressed the need to set the conditions and objectives for privatisation by the end of 2024.

Background to Privatization

The privatisation of TAP Air Portugal is part of a broader strategy by the Portuguese government to strengthen the country's economy and increase the competitiveness of the national airline. TAP, which has had to follow a difficult economic path following the COVID-19 pandemic, will be given the opportunity to acquire fresh capital and improve its market position through this measure.

Prime Minister Montenegro expressed a desire for full privatization, while the opposition, represented by various parties that oppose a full divestment, favors partial privatization. The differing views within the political landscape show how sensitive the issue is and what far-reaching consequences the decision to privatize could have for the airline's employees and travelers.

Potential investors

Potential buyers of TAP Air Portugal include major airlines such as IAG (International Airlines Group), Lufthansa Group and Air France-KLM. Infrastructure Minister Espírito Santo said these airlines had expressed significant interest in the talks, but no exact stakes have been disclosed. Lufthansa is reportedly considering a 19,9% ​​stake, which is below the 20% threshold that must be approved by the European Commission.

Luis Gallego, IAG's chief executive, said that while the acquisition of TAP was not mandatory, it would be considered "if it makes sense for the group". The willingness of such large airlines to invest in TAP suggests that they have recognised the potential of the Portuguese carrier, especially in a recovering post-pandemic market.

Challenges and opportunities

The privatisation of TAP Air Portugal not only represents a challenge for the government, but also offers opportunities for the airline itself. A new owner could bring in fresh capital and management expertise necessary for the airline's renewal and expansion. A successful privatisation could also strengthen TAP's position in the international market and increase its appeal to passengers.

However, the process also entails risks. The uncertainty about the future structure of the airline and concerns about job security can cause unrest among employees. The political debate about full versus partial privatization shows the complexity of the project and the different interests that play a role in this process.

The decision to privatise TAP Air Portugal could be seen as a crucial step in the reorientation of the Portuguese aviation industry. Prime Minister Montenegro must now ensure that the privatisation is designed in a way that safeguards national interests while attracting new investment and expertise.

The process of understanding the objectives and wishes of potential investors shows that the government is willing to take a transparent and strategic approach. Whether a full or partial privatization will take place will depend on the political debate and negotiations with the interested parties. What is clear, however, is that the coming months will be crucial for the future of TAP Air Portugal and the role of Portuguese aviation in the global context.

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