The Portuguese government appears to be rethinking its privatisation strategy for TAP Air Portugal (TP, Lisbon), with local news reports indicating a reassessment of its approach. In initial discussions with Air France-KLM, IAG International Airlines Group, and Lufthansa Group, the government outlined its intention to retain a 51% stake, as aviation sector sources claimed in July. However, this proposal has not been well received by all parties, particularly IAG, which, according to the Spanish newspaper La Razón, insists on full control before considering a bid.

Portugal’s infrastructure minister, Miguel Pinto Luz, emphasised that TAP’s privatisation will "not be done at any cost." While the government aims to recover its EUR3.2 billion euro (USD3.4 billion) investment, Pinto Luz also said that the objective is a 100% privatisation, with a focus on "listening to the market" to optimise the proceeds from the sale.

However, concerns have arisen that current offers from the airline groups may undervalue TAP, prompting the government to reconsider the timing of the sale. Officials are exploring the possibility of postponing the sale until 2026, by which time the airline’s valuation could improve. A report is underway to determine whether delaying the privatisation could result in better financial returns.

TAP’s financial travails further complicate the process. The group is divided into two segments, with TAP - Transportes Aéreos Portugueses SGPS, S.A. (TAP SGPS), wholly state-owned, carrying significant debt. This has led to a legal dispute with Azul Linhas Aéreas Brasileiras (AD, São Paulo Viracopos) over a high-interest loan from 2016, which the Brazilian airline now considers at risk of default.

The government remains in talks with the three European airline groups but has high expectations for any offers. It reportedly aims to avoid a bidding war or undervalued proposals, preferring terms that align with its financial goals. Given the ongoing challenges, there are signs that officials are uncertain whether TAP is in a position to achieve the desired outcome, prompting a thorough re-evaluation of the privatisation process.