TAP is top between Europe and Brazil - and it’s for sale.

Well, part of it is for sale, anyway.

The government of Portugal is looking to privatize TAP Air Portugal partially, and interested buyers are lining up. Europe’s big three are all interested, including Lufthansa, IAG, and Air France-KLM, according to our favorite aviation data and news site, ch-aviation.

The partial privatization is set for approval today, September 28, to complete the sale in the first half of 2024.

What exactly could TAP bring to the big three European airline groups? Brazil, mostly.

TAP Air Portugal leads in market share between Europe and Brazil, beating TAM (and subsequently LATAM) to take the top spot in 2012. The mixture of A321neo and A330neo aircraft operating between Lisbon and Brazil take advantage of the unique language ties between Portugal and the world’s 11th-largest economy.

The performance combination of the A321neo and A330neo is fully utilized in the TAP network, taking advantage of the operating cost benefits of the aircraft without being subject to the typical range restrictions. With long-haul flights stretching across the Atlantic and into Africa, there is no need for the more expensive A350 or 787 platforms, bringing TAP a relatively low-cost solution to the market. That low-cost solution provided TAP a profit during the first part of 2023.

For the three big suitors, the stakes are high. The value of TAP Air Portugal to the respective partner networks of Lufthansa, Air-France KLM, or IAG is compounded by the threat of the airline joining a competing network.

TAP has been a member of the Star Alliance since 2005, making the airline an enticing addition to IAG’s Oneworld or Air France-KLM’s SkyTeam partnerships. Star Alliance has the most to lose. Once dominating the corridor between Europe and Brazil with TAM airlines, the merger into LATAM brought a switch to Oneworld… and then a switch out of Oneworld to a more free agent position. But for Star, that free agent position is much more aligned with both competitors than itself.

IAG’s once-domination of the market between LATAM, Iberia, and British Airways has dwindled over the years, particularly as Iberia dropped from 4th to 10th position in service to Brazil. Losing LATAM from Oneworld (yet still maintaining partnership status with British Airways and Iberia) didn’t help, and the ultimate result has been a loss of share for IAG in the market.

Air France-KLM is also in a position to play the offensive market share game with a TAP partial acquisition. Air France and KLM currently occupy the third and fifth rankings, respectively, both topping Lufthansa.

Yet, Lufthansa and Star appear to have the most to lose should TAP go the way of the competing airline groups. Aside from a loosely associated yet surging Azul Brasilian Airlines joint venture with TAP, the loss of the Portugal airline would leave Lufthansa Group and Star Alliance with limited presence in the market.

Final approval for the partial privatization is expected today. Let the bidding commence!

A data-driven look at TAP Air Portugal’s fleet fit

You may have noticed new reports being published as part of Visual Approach Research through our partner AvBench.

Recent additions include the A321neo and E190 at TAP Air Portugal, benchmarking the aircraft fit at the airline to other airlines around the world.

Both of these reports are available through our open analysis (open as in free):

AvBench Airline Competitive Assessment - TAP Air Portugal - Airbus A321neo

AvBench Airline Competitive Assessment - TAP Air Portugal - Embraer E190

We are proud to have AvBench as a partner and invite you to reach out to the team to discuss their new EAGLE-i solution for working alongside airline credit analysis to detail the operational and commercial fit of aircraft at an airline.

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