LONDON, April 2, 2026, 19:10 BST
International Consolidated Airlines Group SA is stepping back from the TAP Air Portugal process, dropping its pursuit of a minority holding. That leaves just Lufthansa and Air France-KLM as publicly confirmed contenders for Portugal’s lagging airline sale. The British Airways parent said it’s shifting focus to expanding within its current portfolio. 1
This is significant right now because TAP sits right in the crosshairs of Europe’s ongoing airline consolidation push. Cirium data shared at an industry event in January put 36 airlines behind 80% of European seat capacity. In the U.S., just six carriers hold that share. IAG had long been viewed as a top contender for TAP. 2
Portugal plans to sell 44.9% of TAP, with an extra 5% held aside for staff. Bidders had until Thursday to submit non-binding offers—these outline both price and strategy, but don’t lock anyone in yet. Parpublica, the state’s holding company overseeing the process, will sift through the submissions and then ask for binding bids within 90 days. The government’s aiming to wrap up the sale in the second half of 2026. 1
Lisbon’s the target. What makes TAP attractive are its airport slots—key takeoff and landing permissions at a crowded hub—and its established connections to Brazil, Portuguese-speaking Africa, and the U.S. Air France-KLM chief Benjamin Smith describes TAP as a “natural fit.” Lufthansa boss Carsten Spohr, for his part, has argued his group would be TAP’s “best partner.” 1
IAG backing away isn’t exactly a surprise, given the conditions it spelled out before. Back in January, Jonathan Sullivan, the group’s chief corporate development officer, was clear: a minority stake was only on the table if there was “a path for a majority stake.” Last year, Chief Executive Luis Gallego floated the idea that TAP “may make sense” because of its Brazil exposure, but only if the privatisation terms lined up. 2
The group doesn’t have much pressure to force a deal right now. Back in February, IAG topped annual profit estimates—premium tickets and transatlantic routes played a big part—and announced plans to hand 1.5 billion euros to shareholders over a year, with capacity set to rise around 3%. “Since Q3 we have seen a rebound” in the economy segment, Gallego told reporters at the time. 3
Thursday’s move marks a sharp turn from the initial tone. Earlier, bankers and analysts put IAG at the top of the list for TAP, pointing to the fit between Iberia’s Madrid hub and TAP’s South Atlantic routes. Bernstein had pegged the 44.9% stake at about 700 million euros—a premium of 25% to 30% over European peers. 2
The agreement remains unsettled. Portugal insists that whoever takes over must ramp up service throughout its entire airport network—Lisbon alone won’t cut it. Fuel risk is now a bigger concern. Just this week, Ryanair’s Michael O’Leary flagged the possibility that airlines might need to “cancelling some flights” should Middle East supply issues stretch into summer. 4
IAG’s decision to sit this one out keeps it clear of another regulatory and political headache—after last year’s failed Air Europa bid, sunk by EU competition worries. That leaves TAP as a head-to-head fight for now, with the once-favored airline group watching from the sidelines. 5
