Lufthansa says TAP deal brings up to €450M in synergies

Lufthansa executives made their case on Thursday, October 15, for the group's planned purchase of a minority stake in TAP Air Portugal, one day after Lisbon chose the German group over Air France-KLM. CEO Carsten Spohr called the deal a "couldn't miss" opportunity and put annual synergies at as much as €450 million. TAP, one of Europe's last unaligned flag carriers, would give Lufthansa the Latin American reach it has lacked compared with its rivals.rte.ie

Latin America push

Spohr told analysts the deal would lift Lufthansa's share of Europe-Latin America traffic from 9% to about 20%. That would put the group level with IAG International Consolidated Airlines Group, S.A. and ahead of Air France-KLM. "TAP is a perfect fit for us," he said, adding that Brazil is the top priority. Lufthansa plans to build up Lisbon as a hub while keeping TAP's national identity. It also plans to grow TAP's fleet of about 100 aircraft to 117 by 2035.marketscreener.com+1

CFO Till Streichert said he expects the deal to close in the first half of 2028. Spohr expects the European Commission to rule faster than it did on Lufthansa's takeover of ITA Airways, because TAP's flights overlap less with Lufthansa's. A Commission spokesperson said the deal has not yet been formally filed.rte.ie+2

Terms and the remaining 50.1%

To start, Lufthansa will pay €1.025 billion for 44.9% of TAP. Its stake could rise to 49.9%, for up to €1.2 billion, if TAP employees do not buy the 5% set aside for them. Prime Minister Luís Montenegro said Lufthansa's offer was 16% higher than Air France-KLM's and "carries a lower degree of uncertainty".aerospaceglobalnews.com+1

Streichert said separate talks are underway on the state's remaining 50.1% stake. Through those talks, Portugal could end up owning as much as 5% of Lufthansa. Lufthansa has proposed paying €1.351 billion for that second stake: €863 million in cash plus Lufthansa shares worth €488 million. That second phase still needs further decisions and approvals. The government said the second phase could begin in 2028.morningstar.com+2

Rival's response

Air France-KLM had hoped Lisbon would become its southern hub. A spokesperson said the group was "naturally, disappointed not to have been selected." The spokesperson added that it "will examine all options" to strengthen its presence in Portugal and on routes to South America.aviationweek.com

Portugal took TAP back into state control during the pandemic and put about €3.2 billion into the airline. Infrastructure Minister Miguel Pinto Luz said the decision "was not confined to price" and protects "the interests of TAP and the Portuguese people".aerotime.aero+1