(March 30): Portugal is confident Europe’s three biggest airline groups will bid for a stake in TAP SA ahead of a deadline this week, brushing aside concerns that the Iran war is fuelling oil volatility and uncertainty across the aviation sector.
State-owned TAP stands out because it’s “probably the last” mid-sized airline in Europe available on the market, with strong links to South America, Africa, the US and Canada that make it especially attractive to rivals, Finance Minister Joaquim Miranda Sarmento said in a Bloomberg Television interview on Monday.
British Airways parent IAG SA, Air France-KLM and Deutsche Lufthansa AG have been invited to submit non-binding offers by April 2.
“I think those three groups continue to look at TAP from a medium- to long-term perspective of growth,” Miranda Sarmento said. “I don’t think this crisis will have a strong impact on the interest and the conditions for the privatisation.”
Lisbon plans to sell as much as 49.9% of TAP, including 5% reserved first for employees, while requiring the airline to keep its hub in Lisbon and maintain routes deemed strategic.
British Airways parent IAG is likely to drop its pursuit of TAP after concluding that a minority stake doesn’t fit its strategy, people familiar with the matter said earlier this month. IAG may still make a non-binding offer this week but then drop out of the process, the people said.
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Small deficit
Miranda Sarmento said the government also welcomes further consolidation in the banking sector following French lender BPCE SA’s acquisition of Novo Banco last year, but remains wary of a greater presence of Spanish banks.
“We have no problem with foreign banks buying Portuguese banks as long as there is no excessive regional concentration,” he said. Spanish lenders already account for about a third of Portugal’s banking market, and “we should stop there”.
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On the broader economy, Portugal is in a “very positive position” to absorb the impact of recent floods and the Iran war, though both shocks could weigh on growth and push the budget into a small deficit this year, Miranda Sarmento said.
The floods, which in January and February killed at least 16 people and left large parts of the country underwater, could have a fiscal impact of at least 0.5% of gross domestic product. The war in Iran, along with support measures for families and businesses, is also expected to weigh on growth.
The government in October forecast a budget surplus of 0.1% of GDP, a fourth consecutive positive balance, and economic growth of 2.3% driven by higher investment. While it has yet to formally revise its projections, the Bank of Portugal last week cut its 2026 growth forecast to 1.8%.
“We are committed to maintaining fiscal balance even if we post a small deficit this year,” Miranda Sarmento said during Monday’s interview. “We will continue to reduce public debt and return to fiscal surpluses in the coming years.”
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