Air France-KLM Enters TAP Stake Race Amid Legal Cloud Over Privatization

Air France-KLM and TAP Air Portugal Stake Acquisition

Air France-KLM has become the first known contender to express interest in acquiring a significant stake in Portugal's TAP Air Portugal. The European carrier filed an expression of interest on November 19, 2025, as part of a multi-stage bidding process that could see it own as much as 44.9% of the state-owned airline according to Bloomberg. The government has set a revenue threshold for bidders, requiring them to have at least €5 billion in annual revenue in the past three years according to Bloomberg. Portugal's privatisation plan also sets aside 5% of the stake for TAP employees.

The winning bidder will be evaluated based on strategic plans, price, and commitments to expand the carrier's fleet and route network.

Special emphasis will be placed on routes to Portuguese-speaking countries, which are key to TAP's long-term strategy. Air France-KLM has pledged to maintain the TAP brand, preserve Lisbon as a hub, and continue investing in its network.

The process has been overshadowed by a corruption investigation into TAP's 2015 privatisation deal, which led to police raids at the airline's offices and other entities last week. The probe focuses on a leasing arrangement for 53 Airbus aircraft and allegations of harmful administration, corruption, and fraud. Both TAP and the involved companies have denied wrongdoing and stated they are cooperating with authorities.

Strategic Implications and Bidding Process

Qualified bidders are expected to be invited to submit non-binding offers by early 2026, with binding bids due roughly three months later. The government aims to select a winner soon after the final submissions. Air France-KLM's entry into the race is part of a broader consolidation trend in European aviation, where only a few state-owned carriers remain up for grabs.

The airline's appeal lies in its strong presence in Brazil, Africa, and North America. TAP carried 16 million passengers in 2024 and has remained profitable since 2022 after five years of losses. Air France-KLM, along with IAG and Lufthansa, has shown interest in the carrier over the past year, making the process highly competitive.

Market Reactions and Analyst Outlook

Bernstein analyst Alex Irving described TAP as "the next big deal in European aviation," though he noted IAG could emerge as the most likely winner. Unlike Air France-KLM and Lufthansa, IAG has not recently been integrating new airline networks, giving it operational flexibility. Analysts also highlight the importance of TAP's Lisbon hub for connecting to emerging markets, especially in the Global South.

The uncertainty from the corruption probe could influence investor sentiment and the final bid structure. While TAP's current management has not commented on the legal proceedings, the focus remains on its strategic value as a gateway to Brazil and other Portuguese-speaking countries.

Risks to the Outlook

The ongoing investigations could delay or complicate the privatisation process, particularly if further legal actions are taken against TAP or its former owners. The 2015 privatisation was eventually reversed after a change in government, underscoring the political sensitivity of the airline. This history adds a layer of uncertainty for potential bidders, who must weigh legal and political risks alongside strategic and financial considerations.

Despite these challenges, the airline's profitability and route network continue to attract interest from major European carriers. The final outcome will depend on how bidders address the government's strategic priorities and how the legal environment evolves in the coming months.