Tavares Consortium Bids €17M for Azores Airlines Stake in EU-Driven Privatization Push

Former Stellantis CEO Carlos Tavares is leading the only known bid for Portugal's Azores Airlines, as the regional government nears a deadline to privatize the carrier. The Atlantic Connect Group, a consortium formed by Tavares and three partners, has offered €17 million for an 85% stake in the airline, excluding services between the Azores islands. The bid aims to make the carrier financially sustainable by restructuring its revenue model and cost structure according to reports.

Tavares, known for his turnaround expertise in the automotive industry, said the consortium plans to bring in a new CEO to run daily operations, while he would serve as chairman. The proposed acquisition includes international routes and flights to mainland Portugal, positioning the airline to better compete in a challenging market. The sale is part of the Azores government's obligation to divest state-owned assets under EU regulations as per the government's mandate.

The privatization comes amid a difficult financial situation for Azores Airlines. The carrier reported a net loss of €71.2 million in 2024, more than double its 2023 loss, and its net debt rose to €422 million. The European Commission approved a €453 million state aid package in 2022 to help the airline recover after pandemic-related disruptions. However, the government must now complete the privatization by year-end to comply with EU rules as regulations require.

Background on the Acquisition Bid

The Atlantic Connect Group includes Tavares along with businessmen Tiago Raiano, Paulo Pereira, and Nuno Pereira. Raiano and Pereira were initially the primary proposers and joined forces with Tavares and Pereira to form the new entity, which will handle communications with stakeholders and streamline the process according to sources.

The consortium plans to implement labor and operational reforms to ensure the airline's long-term sustainability. Tavares said the proposal was developed with the support of employee unions and aims to reinforce the company's strategic role in the region. The four entrepreneurs will now work through the Atlantic Connect Group to present their proposal to the privatization jury according to the consortium.

The privatization process faced delays earlier this year when the Azores government canceled the previous tender and authorized direct negotiations with the Newtour/MS Aviation consortium. This led to an extended deadline for submitting proposals, pushing the final date to November 24. A union representing airline pilots approved the proposal in a vote, giving it further legitimacy according to union sources.

Implications for the Airline and the Region

Azores Airlines plays a key role in connecting the remote island chain to mainland Europe and North America. However, the carrier has struggled with high operating costs and competition from low-cost carriers like Ryanair, which announced it would stop flying to the Azores in March 2026. The Atlantic Connect Group hopes to address these challenges by restructuring the airline's business model and reducing costs as the market shows.

Tavares, who has previously invested in agriculture and hospitality in Portugal, believes the airline's geographic position and relatively small size offer opportunities for a turnaround. He emphasized that success will depend on securing stakeholder support, including from employees and unions, who have already expressed backing for the proposal according to analysts.

If the bid is accepted, the next step will involve a binding-offer phase, with the transaction expected to close by the end of 2026. The privatization jury, led by economist Augusto Mateus, is now reviewing the submitted documentation and is prepared to request further clarifications from the consortium as per the jury's review.

What This Means for Investors and the Market

The proposed acquisition is part of a broader trend of privatizing state-owned enterprises in Europe to reduce public debt and improve efficiency. For the Azores, the sale represents a critical step in meeting EU obligations and reducing the financial burden on the regional government.

The success of the Atlantic Connect Group's plan will depend on its ability to implement cost reductions and generate sustainable revenue. Investors and analysts will closely watch how the airline performs after the privatization, particularly in terms of profitability and debt management. Any missteps could threaten the viability of the new ownership structure.

Given the airline's current financial struggles and the high costs of operating in a remote location, Tavares and his partners will need to execute their strategy carefully. If successful, the turnaround could serve as a model for other regional airlines facing similar challenges.