The Portuguese government has approved a decree to initiate the re-privatisation of TAP Air Portugal (TP, Lisbon), disclosing that it intends to sell at least 51% of the company while 5% will be reserved for employees.

Speaking at a news conference, Finance Minister Fernando Medina, Secretary of State André Moz Caldas, and Infrastructure Minister João Galamba said the government was seeking investors aligned with its strategic goals for TAP.

"We want large-scale investors from the aviation sector, alone or in consortia, that are aligned with our strategic goals. We do not seek to attract pure investments of a financial nature that are looking to get into TAP to then sell it or sell parts of it, and we want to reiterate TAP's strategic contribution to the country," Medina said in a statement.

The next steps would involve selecting strategic, financial, and legal consultants to advise the government, consulting the market and engaging with potential investors. The goal is to finalise the specifications by the end of 2023 or early 2024. Three airline groups that have expressed an interest in TAP include Lufthansa Group, Air France-KLM, and IAG International Airlines Group.

The privatisation is based on five strategic principles: promoting TAP's growth; boosting Lisbon as the national hub; creating jobs; bolstering other airports, specifically Porto; and maximising the financial returns for the country. Galamba underlined that the timing is ideal to trigger the sale due to the airline's positive performance and recent return to profitability as well as the prospects for consolidation in the aviation sector.

Medina said that global accountancy firm Ernst & Young and Portugal's Banco Finantia had already submitted their evaluations of the airline but declined to disclose its value. He said the privatisation perimeters had already been defined and that sister carrier Portugália Airlines (NI, Lisbon) would be included in the sale, the daily Expresso reported.

Meanwhile, Jornal Económico, citing a confidential version of TAP's approved restructuring plan, claimed the government knew all along that the European Commission valued the airline at between EUR1 billion euros (USD1.05 billion) and EUR1.9 billion (USD2 billion), meaning Portuguese taxpayers would not be compensated for the Brussels-sanctioned state aid of EUR3.2 billion (USD3.35 billion), even if the government sold its entire stake in the company.

According to the newspaper, the final evaluation of TAP will be impacted by the uncertainty of what to do with technically bankrupt holdco TAP SGPS, which owns Portugália Airlines and part of ground-handling unit Groundforce Portugal. Among others, the holding owes EUR189 million (USD198 million) to Azul Linhas Aéreas Brasileiras (AD, São Paulo Viracopos), whose majority owner David Neeleman was TAP's majority shareholder between 2015 and 2020. By 2026, TAP SGPS must repay him EUR90 million (USD94 million) in bonds subscribed in 2016 and EUR99 million (USD103 million) in accumulated interest.