Government approves Terms of Sale prospect for a 49.9% privatisation of TAP
The Portuguese government’s Council of Ministers has given the green light to the Terms of Sale prospect that dictate the terms and conditions of the 49.9% sale of State-owned airline TAP to prospective buyers.
A decree-law published in the Diário da República has confirmed that a 5% shareholding will be set aside for the company’s employees, and if the employees state (through their respective unions) that they do not want all of this percentage, the remaining percentage will revert to the investor.
The government is working on a timetable to have TAP part privatised by July 2026 which is deemed the time necessary to complete all of the stages of the tender competition (both binding and non-binding offers) and allow the Portuguese parliament to make its evaluations of the process and offers, and the final negotiation, reports the online business source ECO.
The government has set a date for July 10 to announce the eventual sale with the decision to “involve the company being open to receive capital from one or more investors up of up to 44.9%, and including 5% to the employees”, said the Prime Minister, Luís Montenegro on Thursday.
The Prime Minister also insisted that the Terms of Sale would necessarily contain clauses to safeguard Lisbon’s position as a hub, (so the eventual purchasing airline group can’t transfer the hub to another capital, such as Madrid)
If the government is unable to achieve its objectives (including in terms of price), the sale process may be suspended without any compensation to the prospective competing investors.
Last month, the three large airline groups in Europe, Lufthansa, Air France-KLM and IAG (British Airways and Iberia) confirmed their interest in acquiring a share in TAP but said they were still looking into the conditions of sale attached.
In the first half of this year, TAP saw losses increase from €24.8 million, recorded in the first half of 2024, to €70.7 million. Revenues fell 1% to €1,955 million, despite carrying 2.2% more passengers. Although the half-year net result was negative, between April and June, the airline made a profit of €37.5 million.
The most recent publicly available book value for TAP is around €2,181.7 million, as indicated in a study from the University of Lisbon published in 2024, suggesting that the total investment of €3Bn in the restructuring plan may not be fully recoverable.
