Frankfurt and Lisbon are 1,876 km apart. A jetliner takes 3 hours to cover the distance. That is the length of time that Carsten Spohr, CEO of Lufthansa, spent on a plane on Monday (02SEP24), to hold face-to-face talks with the Portuguese government about his airline’s participation in TAP Portugal. Spohr, accompanied by three other managers, entered the main door of the finance ministry shortly after 11:00, local time, for a meeting with infrastructure minister, Miguel Pinto Luz, followed by other talks with high-ranking politicians.

The reason for the Frankfurt-Lisbon journey: Lufthansa intends to acquire 19.9% of TAP shares. A deliberate move, since this is below the 20% threshold that would require approval from the EU’s antitrust regulator. Thus, Lufthansa can hope to avoid going through the same tough and time-consuming negotiations with the Brussels competition watchdogs as its did during its intention to acquire Italy’s ITA.
Maintaining Lisbon as intercontinental hub
The moment for negotiations about the Lusitanian carrier’s future, seems favorable because the Portuguese government wants to sell a majority stake in TAP, as announced by the government led by former head of state, Antonio Costa. That government was replaced in APR24. Costa’s successor, Luis Montenegro, and his administration are sticking to this goal. Any bidder will have to guarantee to maintain Lisbon as a hub for air traffic to Latin America and take over all current TAP employees. According to Reuters, Lufthansa would have to pay 180 to 200 million euros for TAP. Although the price plays an important role, it is not the decisive factor. Of higher importance is that the new TAP partner maintains and expands the carrier’s South American network; mainly routes to and from Brazil, TAP’s key overseas market.
Strengthening services to and from Latin America
Provided both sides reach a deal, Lufthansa plans to gradually increase its stake in TAP. However, this will only happen after Lufthansa becomes a majority owner in Italy’s ITA Airlines, where it holds 40% since MAY23. The precondition is that ITA generates sustainable profits, Lufthansa announced. Once accomplished, the Italian government will sell another 40%, but retain a 20% ownership in ITA.
A similar deal doesn’t seem to be intended by Portugal’s Mr. Montenegro and his administration. However, the government has guaranteed to secure a 5% share package for the employees in case TAP is privatized.
So far, neither Lufthansa nor the Portuguese government have commented on the matter. If an agreement is inked, it is not expected to be realized until Q1, 2025, at the earliest.
Air Europa as an option
That would give competitors such as AirFrance-KLM or the IAG Group plenty of time to submit a counteroffer. This applies particularly to the British-Spanish IAG Group after its plans to take over Madrid-based Air Europa turned to dust due to the tough conditions imposed by the EU Commission. Consequently, British Airways, Iberia, Vueling and Aer Lingus are very closely monitoring the European aviation market for takeover opportunities.
Should Lufthansa be rebuffed in Lisbon, it would still have the option of bidding for Air Europa. The Spaniard’s transatlantic network is also attractive, with particularly interesting tourist routes, for example, to the Caribbean. Air France-KLM would have the same option should it encounter closed doors in Lisbon.