Lufthansa Fires First Shot in Battle for TAP — Europe’s Next Big Airline Prize Is Suddenly in Play

This article first appeared on GuruFocus.

Lufthansa’s (DLAKY) move on TAP lands at an interesting moment for European aviation, and investors are watching the setup with the same intensity they’d apply to a crowded trade. After submitting its expression of interest to the Portuguese government, Deutsche Lufthansa AG framed itself as the partner that could possibly unlock TAP’s long-term potential. The group aims to start with a minority stake as Portugal prepares to sell up to 49.9% of the airline, with 5% earmarked for TAP workers. For Lufthansa, the draw is Lisbon’s positioning in the Atlantic corridor a gateway that could be strengthened further if the partnership materializes.

Management isn’t playing coy about its pitch. Carsten Spohr emphasized the value of TAP’s Portuguese identity while pointing to Lufthansa’s 70-plus years in the market and more than 280 weekly flights already linking Portugal to its broader network. The competitive field isn’t empty: Air France-KLM has already raised its hand, and expectations for bids from Lufthansa and IAG SA had been circulating. Bernstein’s Alex Irving wrote that IAG could be a strong contender, partly because its exposure on EuropeBrazil routes is smaller and partly because it is the only one of the three large groups not currently digesting another airline.

Behind the interest sits a carrier that has quietly rebuilt momentum. TAP carried 16 million passengers in 2024, a 1.6% increase from the prior year, and has been profitable since 2022. Its links to Brazil, its presence in Africa, and its reach into North America have turned it into one of the few remaining state-owned assets of scale in Europe. Lufthansa’s own acquisition of a minority stake in ITA Airways earlier this year adds a layer of context: consolidation may not be accelerating, but this could be one of the next meaningful moves in a region already dominated by three major airline groups.