TAP Air Portugal Privatization: initial Interest Confirmed, Process Underway
The portuguese government has moved forward with the privatization of TAP Air Portugal, along with its subsidiaries – Portugália, TAP Health Care Unit, Cateringpor, and SPdH (formerly Groundforce). The deadline for submitting expressions of interest expired this week, with confirmed interest from major airline groups including Air France-KLM, Lufthansa, and International Airlines Group (IAG), the parent company of British Airways and Iberia.
Parpública, the state-owned entity managing the government’s holdings, will now spend the next 20 days, until December 12th, evaluating the submitted expressions of interest. Candidates will be assessed against criteria including a minimum annual revenue of €5 billion (achieved in at least one of the last three years), demonstrable experience in the aviation industry, sufficient financial capacity, and overall suitability.
Triumphant candidates will then be invited to submit non-binding proposals within 90 days. These proposals will need to outline the proposed purchase price, funding sources, and detailed investment plans focusing on fleet modernization, maintenance and engineering capabilities, lasting fuel adoption, upholding labor commitments, and a long-term strategic vision, potentially including future increases in ownership stake.
Following the non-binding proposal phase, Parpública will prepare a report for the Government within 30 days.The Council of Ministers will then select the most promising applicants based on this report and invite them to submit binding proposals, with a timeframe of up to 90 days.
A final report will be prepared by Parpública within 30 days of receiving the binding proposals (potentially extendable by the Council of Ministers). this will lead to the selection of the winning bid, potentially following a negotiation phase for final improvements. The Council of Ministers will then approve the final sales contracts, which the buyer must sign within 15 days.
The privatization process is expected to take approximately one year, contingent upon receiving necessary regulatory approvals. The government intends to sell up to 44.9% of TAP’s capital, with 5% specifically reserved for employee acquisition. Should the employee allocation not be fully subscribed, the winning bidder will have the right of first refusal for those shares.