Aer Lingus-owner IAG is tipped as the leading candidate to acquire a stake in Portuguese carrier TAP, valued at around $1 billion, according to bankers and analysts. The potential deal marks the next phase of European airline consolidation, as carriers grapple with high costs and price-sensitive consumers.
Industry executives at the Airline Economics finance conference in Dublin highlighted the need for consolidation to compete with US, Gulf, and Asian rivals. Portugal's government is expected to begin formal sale talks soon for a minority or majority stake in TAP, with a spokesperson confirming the sale will occur this year.
IAG, which also owns British Airways and Iberia, is seen as the most keen and strongest candidate, leveraging its success with Iberia in Madrid as a model for a Southern European hub. Lufthansa and Air France-KLM have also expressed interest, eyeing TAP's access to the lucrative South American market.
IAG's chief corporate development officer, Jonathan Sullivan, stated the group is open to a minority stake with a path to majority control, emphasising that TAP would remain "a proudly Portuguese company." Analysts say retaining TAP's national identity is crucial for government approval, similar to IAG's preservation of Iberia's Spanish identity post-merger.
However, political upheaval in Portugal and regulatory scrutiny could delay talks. A previous Socialist government approved privatisation of at least 51% of TAP in 2023, but a snap election in March 2024 stalled progress. Prime Minister Luis Montenegro has since signalled openness to a partial sale, potentially avoiding EU competition assessment if the stake is under 20%.
Analysts warn of challenges, noting that IAG's ownership of Iberia could raise competition concerns, forcing concessions akin to Lufthansa's ITA deal. The European Commission's tough stance previously prompted IAG to abandon its Air Europa takeover. Goodbody analyst Dudley Shanley suggested the timeline may slip into early 2026.
