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Portugal: TAP buyer will be determined by strategy and not price

The decision to sell a minority stake in TAP is a strategic one that depends on much more than the price.

Portugal has relaunched the long-delayed TAP privatisation, with a view to selling a 44.9% share to a strategic partner airline to increase its global reach, and to improve competitiveness. 5% of this stake will be reserved for employees. The government has requested that Air France-KLM and Lufthansa submit binding bids by the 29th of July after both airlines emerged as sole competitors, with initial offers they deemed to be "largely equal and very ambitious" in terms of strategic, industrial, and financial criteria.

Infrastructure Minister Miguel Pinto Luz stated that such a proposal was by nature 'complex' and involved many factors.

He did not elaborate, but the government said that bidders should commit to strengthening TAP’s operations and routes not only in Lisbon, but also at Portugal’s other nine airports including Porto, Faro and the Algarve and the archipelagos Azores and Madeira.

Pinto Luz told a parliamentary committee that "this is a strategic choice which should not be based solely on price and requires discretion and careful consideration."

TAP's main draw is the lucrative and prime slots that connect its Lisbon hub to Brazil, Portuguese-speaking African countries, and the United States.

Parpublica, the state-owned holding company, has 30 days after receiving binding bids to provide a final assessment of their merits. The government can then choose a winner or begin negotiations with either or both bidders in order to improve final offers.

The government will likely decide the winner of this election later in the year. (Reporting and editing by Emelia Sithole Matarise; Reporting by Sergio Goncalves)

(source: Reuters)