The three main European airline giants, Lufthansa, IAG and Air France KLM, which have expressed an interest in buying a controlling stake in Portuguese airline TAP, are likely to make a bid in September after the government clarifies its position on value, starting price and the percentage it intends to retain in the carrier.
The three interested parties see the eventual deal as a way of market consolidation, an opportunity to increase market share, particularly in Latin America, and gain scale and increase destinations, says the online news service ECO.
Of the three, Lufthansa is the largest and most valuable, but IAG, which has British Airways and Iberia, could become the largest airline group in Europe if it succeeds in its bid. KLM, on the other hand, stands to grow the most.
KLM has already hired legal, financial and communications companies to prepare its bid for part of TAP’s capital that has been controlled by the State since the airline was renationalised in 2021.
The Lufthansa Group, which has Austrian Airlines, Brussels Airlines, Eurowings and Swiss, has the largest structure and clout. Last year it carried over 100 million passengers, and to June added a further 50 million. If it bought TAP, it would gain nearly 17 million more based on 2019 figures.
IAG, which has BA, Iberia, Aer Lingus and Vueling, would overtake Lufthansa if it successfully purchased TAP with 108.5 million passengers based on 2022 numbers. In the first six months of 2023, IAG carried around 54.3 million, almost as many as the Lufthansa Group.
Because of its smaller size, Air France-KLM stands to grow more in terms of annual percentage: 16.5% with an extra 97 million passengers. Between January and June this year, it carried 44.3 million. Add TAP’s passenger numbers for this year (7.58 million), it would narrow the gap between it and its competitors (51.9 million).
But whichever company wins the competition, it is TAP’s lucrative Brazil routes that these airlines want, as well as routes in the US and Africa.
And the government has already made it clear that it has a number of red lines that cannot be crossed including the preservation of the TAP brand, Lisbon as a hub airport, as well as many of the routes.
Source: Essential Business