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Air France-KLM Offers Stake in Parent Company to Sweeten Bid for Portugal's TAP
Air France-KLM (EPA:AF) has offered the Portuguese government a stake in its airline group as a key component of its bid for Portugal's national carrier, TAP SA. The move is a strategic effort to gain an edge over a competing offer from Germany's Deutsche Lufthansa AG (ETR:LHAG), according to a Bloomberg report citing a person familiar with the matter.
A Strategic Sweetener
Under the proposal, Portugal would have the opportunity to take shares in Air France-KLM as part of the transaction for TAP. This arrangement would grant the Portuguese state influence within one of Europe's largest aviation groups, which is also in the process of taking control of Scandinavian airline SAS AB.
Air France-KLM's offer distinguishes it from its main competitor. A rival bid from Lufthansa does not include a similar share-swap component, according to a recent report from Portuguese business newspaper Jornal Economico. Air France-KLM has reportedly stated it will only pursue a deal that is financially viable and fits within its risk profile.
The Race for TAP
The Portuguese government is in an additional round of negotiations with both airline groups as it seeks improved offers for a minority stake in the state-owned carrier. A final decision on the winning bidder is expected in the coming weeks.
Portugal plans to sell a stake of up to 49.9% in TAP. The sale is structured to include:
Ad- Up to 44.9% to a strategic industrial partner.
- As much as 5% reserved for the airline's employees.
The government has indicated that both offers are close in overall value, making non-financial components a potentially decisive factor.
Broader Consolidation
Beyond the share offer, Air France-KLM's bid reportedly includes commitments to protect the TAP brand and maintain Lisbon's status as a major international hub. The competition for TAP highlights the ongoing trend of consolidation within the European airline industry as major players seek to expand their networks and market share.
Air France-KLM's simultaneous move to acquire control of SAS underscores its expansionist strategy. The outcome of the TAP bidding war will be a significant development in shaping the competitive landscape of European aviation.
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