Portugal sees market appetite to privatise TAP, preparations underway

3 months ago 18

Portugal’s government wants to privatise flag carrier TAP sooner rather than later to take advantage of market interest in the airline and is moving forward with preparatory work, Infrastructure Minister Miguel Pinto Luz said on Wednesday (24 July).

He said the privatisation process initiated by the previous centre-left administration “never stopped” after the centre-right government took over in April and the latter was “carrying out assessments and consultations to define possible models” for the sale, if without setting any deadlines for now.

“TAP is to be privatised … We are clearly aware that the market is there for it and we are hurrying to do it,” Pinto Luz told a parliamentary committee, adding that the market had the necessary “conditions in terms of liquidity and dynamics (for us) to achieve this objective”.

TAP has so far attracted interest from Lufthansa, Air France-KLM and British Airways owner IAG.

“Things are moving forward … in due time we will bring to light what is our vision or the possibilities (of privatisation) to discuss with everyone,” he added.

Prime Minister Luis Montenegro said during the election campaign he wanted TAP to be fully privatised.

The previous administration approved the sale of at least 51% of TAP in September, but did not have time to carry it out.

Industry executives, investors and experts say greater scrutiny of consolidation and tie-ups between airlines by European regulators and demands for remedies could deter major airlines from further deals.

Airlines have said consolidation is needed to help offset soaring operating costs, but Brussels is concerned Europe’s three largest groups, all of which have shown interest in TAP, are becoming too dominant.

In May, TAP CEO Luis Rodrigues called on the government to maintain a stake in the airline and defended the possibility of bringing in non-aviation investors to ease competition concerns, but he was rebuked by Pinto Luz who told him not to “meddle” in its privatisation, which is a matter for shareholders.