Lufthansa in talks with Portuguese Government over TAP

Lufthansa is eyeing a 19.9% stake in TAP Air Portugal, according to reports.

On Monday, Lufthansa CEO Carsten Spohr met in Lisbon with the Portuguese Government to formally signal his company’s interest in the privatisation of state-owned carrier TAP Air Portugal, according to reports.

Lufthansa is eyeing a 19.9% stake in TAP, below the 20% threshold that would require approval from the European Commission, the EU's antitrust regulator.

The meeting between Spohr and the two officials who oversee TAP Air Portugal, Finance Minister Joaquim Miranda Sarmento and Infrastructure Minister Miguel Pinto Luz, was requested by Lufthansa, a source said.

Spohr, accompanied by three others, entered the main door of the finance ministry shortly after 11 a.m. local time (1000 GMT), where the infrastructure minister had arrived earlier.

The meeting comes as Portugal seeks to push ahead with the privatisation of the airline, which is fully government-owned, by the end of this year, a third source said.

The source said that while the sale process is still at a very early stage, the government intends to speed it up as everything indicates that there is interest from potential buyers.

The first source said Lufthansa’s view is that the government may prefer them as a buyer because they would preserve TAP's autonomy, but so far the formal process has not started.

At least two other major industry players - British Airways owner IAG (ICAG.L) and Air France-KLM (AIRF.PA) - have already signalled their interested in TAP.

The Portuguese carrier has been an attractive target for acquisition partly because its hub in Lisbon is ideal for Europe-Latin America connections, along with connectivity in Africa. 

The airline can serve many of those transatlantic routes with cost-efficient narrowbody aircraft, particularly the Airbus A321LR that can fly as far as Bélem in Brazil and Washington Dulles in the U.S. nonstop from Lisbon, Airline Weekly noted last September.

In July, Portugal's infrastructure minister said that he wanted to privatise TAP sooner rather than later to take advantage of market interest in the airline.