Portugal Passes Law to Commence Reprivatization of TAP Air Portugal

The Portuguese government has given its approval for the initiation of TAP Air Portugal’s reprivatization, disclosing plans to sell a minimum of 51% of the airline, while allocating 5% for employees.

Finance Minister Fernando Medina, Secretary of State André Moz Caldas, and Infrastructure Minister João Galamba announced the government’s intention to attract strategic investors aligned with TAP’s goals. The government seeks long-term investors in the aviation sector rather than those focused solely on financial gains.

The next steps involve selecting consultants for strategic, financial, and legal advice, engaging with potential investors, and finalizing specifications by late 2023 or early 2024. Major airline groups expressing interest in TAP include Lufthansa, Air France-KLM, and IAG International Airlines Group.

The reprivatization is based on five strategic principles, including promoting TAP’s growth, enhancing Lisbon as the national hub, job creation, supporting other airports, and maximizing financial returns for the country. Galamba emphasized the opportune timing for the sale due to TAP’s positive performance, recent profitability, and potential consolidation in the aviation sector.

Although the government did not disclose TAP’s value, global accountancy firm Ernst & Young and Portugal’s Banco Finantia have submitted evaluations. Reports suggest the European Commission values TAP between EUR1 billion and EUR1.9 billion, indicating that taxpayers may not be compensated for the sanctioned state aid of EUR3.2 billion, even if the entire stake is sold.

Jornal Económico reported that the final valuation would be influenced by uncertainties surrounding the technically bankrupt holding company, TAP SGPS, which owes substantial amounts to Azul Linhas Aéreas Brasileiras. The government plans to include both TAP and Portugália Airlines in the reprivatization process.

This strategic move aims to secure TAP’s future, attract suitable investors, and contribute to the overall growth of Portugal’s aviation industry.