Lufthansa buys just under half of TAP Air Portugal in billion-euro deal

Lufthansa has won the race for TAP Air Portugal with a bid of up to €1.2 billion for up to 49.9 percent of the airline, beating a rival offer from Air France-KLM that valued TAP about 16 percent lower and mixed cash with shares. Lufthansa will pay €1.025 billion for a 44.9 percent stake, rising to €1.2 billion if it also buys shares first offered to TAP's employees and pays a ticking fee that accrues until closing. Portugal's government picked the German group's all-cash offer last week; the deal still needs cabinet approval in Lisbon and clearance from the European Commission, and completion is pencilled in for 2028.

What Lufthansa is buying is a position on the South Atlantic. TAP holds 24 percent of seat capacity between Europe and Brazil, second only to LATAM; folded into the group, Lufthansa's airlines would hold 36 percent. The German group expects about €450 million a year in synergies from commercial activities, better network connections, joint purchasing and cargo, helped by TAP's all-Airbus fleet, which lets some engineering, training and maintenance spending be pooled. Lufthansa also expects TAP to join its transatlantic joint venture with United Airlines and Air Canada, in which partners coordinate schedules and share revenue.

The price of all this is patience with the seller. The Portuguese state keeps 50.1 percent of the shares and a majority on the board, while Lufthansa gets to name the CEO. Gimme Credit, an independent corporate bond research firm, concluded in a report on Tuesday that the benefits may be slow to materialise, citing the state's continued control, drawn-out competition reviews and delays in integrating Italy's ITA Airways — bought into in January 2025, still waiting for US Department of Transportation approval of the same kind of joint venture, with its first jointly coordinated transatlantic flight not due until summer 2027. Cedric Rimaud, the firm's director of European research, sees revenues from the integration unlikely before 2030.

TAP, one of the last state-owned airlines in Western Europe, stayed in the black for a fourth straight year in 2025, though net profit shrank to €4.1 million, and it lost €99.2 million in the first half of 2026 as fuel costs surged. Every year before the profitable streak belonged to the Portuguese state alone. Lufthansa has promised to keep TAP a standalone airline, to grow its fleet to 117 aircraft by 2035 and to invest €500 million in Portugal — pledges made to the government that keeps the majority, under a structure Rimaud says 'will limit the ability to rationalise operations across the whole group'.

The state that owned TAP through the years before the profits keeps 50.1 percent of the shares and the board majority. Lufthansa, which arrives after the turnaround, names the CEO — and inherits a hub that cannot grow, because the airport is full and a replacement will not open.