Lufthansa and United Airlines have teamed up to acquire 45% of the TAP shares previously held by the Atlantic Gateway Group since 2014. According to local media, negotiations are already at an advanced stage but have so far not been officially confirmed by any of the participants.
Atlantic Gateways’ driving force is U.S.-Brazilian entrepreneur, David Neeleman, founder of JetBlue Airways and Azul Linhas Aéreas Brasileiras. Neeleman and his Atlantic partner, Portuguese
businessman Humberto Pedrosa, hold 45% of TAP, 5% belong to TAP employees, with the government owning the remaining 50% since 2016.
According to Portuguese business paper, Jornal de Negocios, negotiations between the parties are well on track and could also serve to put an end to the evident malaise existing between the government and David Neeleman, particularly since the controversial decision to hand out performance awards to the TAP management last year, which was much criticized by Atlantic Gateway.
Strong Brazilian presence
Neeleman seems to have lost interest in TAP since he intended to go public and list Portugal’s flag carrier on the stock exchange. However, Lisbon’s socialist government strongly opposed these plans and ended the discussions. Given this fact, Neeleman has obviously decided to exit the loss-making airline by selling his shares.
Local observers say that Lufthansa is the driving force behind the intended acquisition. The German carrier’s main interest is TAP’s traditionally strong presence in Brazil where TAP serves 11 destinations, among them: Rio, Sao Paulo, Porto Alegre, and Brasilia. Partnering with TAP could once again give LH a major foothold in the dominant South American market, Brazil, after having lost former Star Alliance partner TAM when they became part of LATAM and decided to move from the Star Alliance (LH, UA, SK, SQ and others) to the competing oneworld club (IAG, American Airlines, Cathay Pacific, Qantas, etc).
Group building process in Latin America progressing
At first glance, the intended Lufthansa and United move is very questionable given the fact that TAP is an operator that burns money year after year, evidenced by the €105.6 million loss in 2019. However, on the positive side there is the strong network across the South Atlantic, the rise in pax demand (17.1m 2019 / + 8.2% y-o-y), TAP’s partnership with Brazilian carrier Azul, and the expanded codeshare agreement with Star Alliance member Avianca, all rendering TAP even more attractive for travelers and cargo clients.
Fleet uptick drives ops costs down
The intended fleet modernization where TAP is a launching customer of the extremely fuel efficient A330-900neo, (19 have been delivered, and 2 more are on order), will massively reduce costs and should allow the airline to break even in the short to medium term. The upgrade of their long-haul fleet will soon bring the average age of the aircraft they operate between Europe and destinations in The Americas down from currently 15 to just 4 years.
We always welcome your comments to our articles. However, we can only publish them when the sender name is authentic.