Portugal Won't Pick a Winner Yet — Lufthansa and Air France-KLM Both Advance to Final Round for TAP
Portugal's government has decided it cannot yet choose between Lufthansa and Air France-KLM for a stake in TAP Air Portugal, opening a final round of negotiations with both European groups rather than declaring a winner from the binding offers they submitted in July. The move, announced September 4, 2026, extends a sale process that has already run for the better part of two years and now sets up a multi-week sprint to a decision that will reshape transatlantic and Africa-bound air travel through Lisbon.
What happened this week
António Leitão Amaro, Portugal's Minister of the Presidency, told reporters that the two binding bids submitted by Lufthansa and Air France-KLM on July 29 carried an "overall valuation that is very close," and that the government judged it worth the "effort to negotiate" improved terms from both bidders rather than settle for either offer as first tabled. The assessment came from Parpública, the state holding company managing the sale, which delivered its report to the government on September 1 after reviewing the two offers.
Leitão Amaro added that "the price is an important aspect, but it is not the only one" — a signal that the government is weighing commitments on jobs, Lisbon's role as a hub, and growth across Portugal's wider airport network (which also includes Porto, Faro, and the Azores and Madeira island airports) alongside the headline valuation.
Both suitors are bidding for up to 44.9% of TAP, with a further 5% reserved for TAP employees, meaning the Portuguese state would keep a majority stake north of 50% regardless of outcome. Neither Lufthansa nor Air France-KLM has disclosed the exact euro value of its bid publicly, and the government has not released one either — only that the two offers landed close enough together to justify asking both sides to sharpen their terms rather than move straight to exclusive talks with one.
The new negotiation window is expected to run several weeks, with the government aiming to receive improved binding bids by late September. Should that hold, the earlier-stated ambition is for a chosen partner to take up a joint management role before the end of 2026, with the actual capital injection following in summer 2027 — a timeline that has already slipped multiple times since the sale was relaunched under Prime Minister Luís Montenegro's government in 2025.
Why two bidders survived to this stage
A third major European group, International Airlines Group — parent of British Airways and Iberia — had also circled TAP earlier in the process but withdrew its interest in April 2026, according to reporting on the bid history. That left Lufthansa and Air France-KLM as the only two contenders standing when binding offers came due in July, each backed by a distinct rationale for wanting a foothold in Lisbon.
Air France-KLM's pitch centers on positioning Lisbon as what it has described as a unique southern European hub within its network — complementary rather than overlapping with its existing Paris-Charles de Gaulle and Amsterdam-Schiphol bases. Delta Air Lines, Air France-KLM's transatlantic joint-venture partner and a SkyTeam ally, is reported to support this bid and would look to negotiate its own commercial agreement with TAP if the deal goes through.
Lufthansa Group's pitch leans on its track record integrating national carriers into its portfolio without erasing their identities — pointing to SWISS, Austrian Airlines, Brussels Airlines and, most recently, Italy's ITA Airways as precedents. Lufthansa has also noted it has operated in Portugal for more than 70 years and currently employs upwards of 500 people in the country, a domestic footprint distinct from TAP itself.
The contest also doubles as a proxy fight between Europe's two dominant airline alliances. Lufthansa is anchored in Star Alliance; Air France-KLM anchors SkyTeam. Whichever group ends up with a TAP stake stands to redirect the airline's codeshare and alliance ties, along with the lucrative connecting traffic TAP carries between Europe and its historic strongholds in Brazil and Portuguese-speaking Africa, including Luanda, Angola — routes that give TAP a network reach disproportionate to its size and make it more strategically valuable than a straightforward revenue comparison would suggest.
The financial backdrop
TAP is not being sold from a position of strength. The carrier reported losses of roughly €99 million in the first half of 2026, which industry reporting attributed primarily to higher jet fuel costs — a pressure playing out across the airline sector this year as benchmark fuel prices have climbed well above where many carriers hedged. TAP remains wholly owned by the Portuguese state, a position that traces back to the pandemic, when the European Commission approved a €1.2 billion emergency liquidity loan to keep the airline flying in 2020, followed by €2.55 billion in restructuring aid and €107 million in pandemic-damage compensation approved in subsequent years. That scale of state support is precisely why Brussels and Lisbon have treated an eventual sale as an obligation rather than an option, and why the current process — first launched, stalled, and relaunched since 2023 — carries political weight beyond the transaction itself.
TAP's network gives whichever bidder wins a rare asset: a hub with limited direct European rivals for nonstop access to Brazil and lusophone Africa, markets where both Lufthansa and Air France-KLM currently rely on partners or longer routings. That scarcity value is a large part of why two of Europe's biggest airline groups have stayed in a bidding process this drawn-out for an airline that is currently losing money.
What the government is asking for beyond price
Portuguese officials have been explicit that valuation alone will not decide the outcome. Reporting on the government's demands points to conditions around continued growth commitments across the country's airport system — not just Lisbon, where TAP's hub sits, but the smaller gateways in Porto, Faro, and the island groups of the Azores and Madeira, which rely heavily on TAP-operated domestic and near-regional connections. Employment protections for TAP's workforce — which industry data has put at roughly 10,000 people group-wide in recent counts — are also understood to be part of the negotiating table, given the political sensitivity of handing a flag carrier's control to a foreign group so soon after taxpayers underwrote its survival.
Both Lufthansa and Air France-KLM have signaled they intend to stay in the race. Air France-KLM has described its interest in TAP as "unaltered" since submitting its binding offer, while Lufthansa said it is "looking forward to continuing the process constructively." Neither company has indicated it is prepared to walk away at this stage, which suggests the coming weeks will center on each side testing how much more it is willing to offer — in price, in job guarantees, or in network commitments — to close a deal that has already outlasted one Portuguese government and multiple relaunch attempts.
What comes next
Parpública and the Portuguese government have not set a public hard deadline beyond the broader ambition to conclude the sale process by the end of 2026, a point the Council of Ministers has referenced previously as the outer boundary for reaching an agreement. If a winner emerges from the current round in the coming weeks, the mechanics would likely follow a familiar pattern for this kind of minority-stake airline privatization: an agreement on price and governance terms, a period for EU merger and state-aid clearance given TAP's history of public support, and then implementation of joint management ahead of the eventual capital injection now pegged for summer 2027.
For NewsFellow's readers tracking European aviation consolidation, TAP's outcome will matter well beyond Portugal's borders. It will determine which of the continent's two largest airline groups gains a stronger claim on Atlantic-facing traffic to Latin America and Africa, and it will be watched closely in Rome, Zurich, Vienna and Brussels — cities whose flag carriers Lufthansa has already absorbed — as a signal of how much appetite remains in Brussels for further consolidation of Europe's national airlines under one of its two dominant groups.
As of this writing, no final decision has been announced and both bidders remain formally in contention; any reporting suggesting a winner has been chosen ahead of an official government statement should be treated with caution.
Sources
- Portugal: Air France-KLM and Lufthansa submit binding bids to buy TAP — Euronews
- TAP privatisation: Portuguese government opens talks with Air France-KLM and Lufthansa — Euronews
- Portugal to Negotiate With Lufthansa, Air France-KLM on TAP Sale — Bloomberg
- Sale of TAP Airline Moves on With Bids by Lufthansa, Air France — Bloomberg
- Portugal opens final TAP privatisation talks with Air France-KLM and Lufthansa — Travel Tomorrow
- Lufthansa and Air France-KLM Enter Final Battle for TAP — RUS Tourism News
- Air France-KLM and Lufthansa bid for TAP Portugal – but what happens next? — AeroTime
- European Commission Approves €1.2 Billion TAP Air Portugal Bailout — Simple Flying
- State aid: Commission approves €2.55 billion Portuguese restructuring aid in favour of TAP Group — European Commission