News Report: Lufthansa negotiates stake in TAP Air Portugal
Feb 26, 2020, 4:00 am
#1
Original Poster
Join Date: Aug 2015
Programs: BA OWS, A3*G
Posts: 262
News Report: Lufthansa negotiates stake in TAP Air Portugal
Link to article on aerotime.aero
[PT] Link to referenced article on jornaldenegocios.pt
If true, that doesn't sound too promising from a consumer standpoint. The eminently reasonable TP TATL fares might be short-lived.
[PT] Link to referenced article on jornaldenegocios.pt
Originally Posted by aerotime.aero
Lufthansa is reportedly engaged in negotiations to acquire a 45% stake in the airline TAP Air Portugal held by David Neeleman, its main private shareholder. To do so, the German carrier is said to have allied with United Airlines.
The local business newspaper Jornal de Negocios reports that David Neeleman is actively trying to sell his half of Atlantic Gateway, a private consortium he formed five years ago with Humberto Pedrosa. Atlantic Gateway holds a 45% stake into TAP Air Portugal, with the rest being owned at 50% by the Portuguese State and at 5% by the employees. It is unclear if Pedrosa is also participating in the divestment negotiations. In November 2019, the same media already claimed that Neeleman was in talks with Lufthansa, United, Air France-KLM, and IAG – information the businessman denied.
Neeleman, who was also involved in the now-defunct Aigle Azur, and the Portuguese government have had dissensions in the past regarding the management of TAP Air Portugal. The airline reported a €105.6 million loss in 2019, on top of a €118 million loss in 2018. In addition to the poor economic performance, Neeleman’s project for a stock market launch was dismissed. His decision to award €1.17 million in performance bonuses to the managers last year was received badly and the state warned against doing the same in 2020.
The local business newspaper Jornal de Negocios reports that David Neeleman is actively trying to sell his half of Atlantic Gateway, a private consortium he formed five years ago with Humberto Pedrosa. Atlantic Gateway holds a 45% stake into TAP Air Portugal, with the rest being owned at 50% by the Portuguese State and at 5% by the employees. It is unclear if Pedrosa is also participating in the divestment negotiations. In November 2019, the same media already claimed that Neeleman was in talks with Lufthansa, United, Air France-KLM, and IAG – information the businessman denied.
Neeleman, who was also involved in the now-defunct Aigle Azur, and the Portuguese government have had dissensions in the past regarding the management of TAP Air Portugal. The airline reported a €105.6 million loss in 2019, on top of a €118 million loss in 2018. In addition to the poor economic performance, Neeleman’s project for a stock market launch was dismissed. His decision to award €1.17 million in performance bonuses to the managers last year was received badly and the state warned against doing the same in 2020.
Feb 27, 2020, 1:49 am
#3
Moderator: Lufthansa Miles & More, India based airlines, India, External Miles & Points Resources
Join Date: Dec 2002
Location: MUC
Programs: LH SEN
Posts: 48,132
TP, SK and LO consistently offer sub 2000€ TATL business fares yet the LH Group/UA/AC ATI insists to charge 30% more and get away with it. TP is bleeding cash without much external interference.
If a recession hits their leisure market or the super profitable south atlantic business, things will go south very fast. Why the investor is pulling the plug is a mystery. Surely they must have know what they were in for?
If a recession hits their leisure market or the super profitable south atlantic business, things will go south very fast. Why the investor is pulling the plug is a mystery. Surely they must have know what they were in for?
Feb 27, 2020, 7:09 am
#4
Join Date: Jun 2005
Location: DUB / LIS
Programs: LH Miles&More, TP Miles&Go Silver
Posts: 112
TP, SK and LO consistently offer sub 2000€ TATL business fares yet the LH Group/UA/AC ATI insists to charge 30% more and get away with it. TP is bleeding cash without much external interference.
If a recession hits their leisure market or the super profitable south atlantic business, things will go south very fast. Why the investor is pulling the plug is a mystery. Surely they must have know what they were in for?
If a recession hits their leisure market or the super profitable south atlantic business, things will go south very fast. Why the investor is pulling the plug is a mystery. Surely they must have know what they were in for?
https://newsroom.aviator.aero/tap-sg...nnual-results/
Feb 27, 2020, 12:48 pm
#5
Join Date: Mar 2009
Location: GVA,OPO
Programs: BD the last decent FFP
Posts: 1,856
TAP had a net profit of €14.1 million in the second half of 2019. With a bit of luck, they might turn the corner.
https://newsroom.aviator.aero/tap-sg...nnual-results/
https://newsroom.aviator.aero/tap-sg...nnual-results/
They have the new routes ready to ensure a negative by year end.
Feb 27, 2020, 11:14 pm
#6
Join Date: Oct 2010
Location: YVR - Vancouver, with most winter weekends in Whistler.
Programs: Aeroplan 35K, Alaska MVP, Marriott Titanium / Lifetime Platinum, Hertz President's Circle
Posts: 4,609
Hard to say whether the coronavirus will impact growth this year but Lufthansa taking a stake in TAP won't help. We'll have $500 in YQ alone before you know it in addition to higher business fares
Feb 28, 2020, 3:09 am
#7
Join Date: Jun 2005
Location: DUB / LIS
Programs: LH Miles&More, TP Miles&Go Silver
Posts: 112
Color me doubtful.
They have the new routes ready to ensure a negative by year end.
They have the new routes ready to ensure a negative by year end.
Feb 28, 2020, 8:24 am
#8
Suspended
Join Date: Jul 2001
Location: Watchlisted by the prejudiced, en route to purgatory
Programs: Just Say No to Fleecing and Blacklisting
Posts: 102,095
Given Portugal in recent years has had a stronger economic and fiscal run than much of Europe, the TATL-flying airline industry cartel kingpins wanting to get in on Portugal's growth and developments there isn't all that surprising even if such a consideration to buy an influential stake in TAP weren't about wanting to kill off low-price competition.
Feb 28, 2020, 8:32 am
#9
Suspended
Join Date: Jul 2001
Location: Watchlisted by the prejudiced, en route to purgatory
Programs: Just Say No to Fleecing and Blacklisting
Posts: 102,095
TP, SK and LO consistently offer sub 2000€ TATL business fares yet the LH Group/UA/AC ATI insists to charge 30% more and get away with it. TP is bleeding cash without much external interference.
If a recession hits their leisure market or the super profitable south atlantic business, things will go south very fast. Why the investor is pulling the plug is a mystery. Surely they must have know what they were in for?
If a recession hits their leisure market or the super profitable south atlantic business, things will go south very fast. Why the investor is pulling the plug is a mystery. Surely they must have know what they were in for?
Feb 28, 2020, 12:06 pm
#10
Join Date: Jun 2007
Location: LIS
Programs: FB LTPE, TP Gold, All Gold
Posts: 1,175
LH's and UA's motivation in buying is clear, as mentioned above.
Neeleman's motivation in selling seems to be related to governmental interference – the minister wants to prevent TP from paying performance bonuses to employees because a loss has been posted.
Neeleman's motivation in selling seems to be related to governmental interference – the minister wants to prevent TP from paying performance bonuses to employees because a loss has been posted.
Feb 29, 2020, 5:33 pm
#11
Join Date: Mar 2015
Location: NYC (Primarily EWR)
Programs: UA 1K / *G, Marriott Bonvoy Gold; Avis PC
Posts: 8,994
Is it possible LH is interested because TP is stronger in Latin America and might see some benefit to the connectivity? Having TP also gives them more optimal connections that don't require backtracking to a good chunk of Europe as well.
Mar 1, 2020, 10:26 am
#12
Join Date: Jun 2007
Location: LIS
Programs: FB LTPE, TP Gold, All Gold
Posts: 1,175
That's TP's biggest asset, together with part of its African network.
Mar 2, 2020, 10:17 pm
#13
Join Date: Oct 2010
Location: YVR - Vancouver, with most winter weekends in Whistler.
Programs: Aeroplan 35K, Alaska MVP, Marriott Titanium / Lifetime Platinum, Hertz President's Circle
Posts: 4,609
It will be interesting to see how the current medical crisis impacts these plans . . . a move upwards in prices wouldn't likely help demand in the short term.
Mar 4, 2020, 4:44 am
#14
Join Date: Jun 2015
Programs: Up in the air...
Posts: 50
With Delta taking a stake in LATAM (and moving it from oneworld to SkyTeam) and IAG going through the acquisition of UX (probably to compensate this loss of partnership with LATAM - and despite all the rumors of challenges that deal is facing), LH&UA are seeing in TP an opportunity to compete in the South America region (I believe Portugal and Brazil signed an agreement removing all airspace restrictions between both countries which might be an attractive element as well). The Africa element is probably just a good add-on.
Last edited by FT-Diplomat; Mar 4, 2020 at 4:52 am Reason: Clarify I am referring to potential purchasing rationale
Mar 5, 2020, 8:04 am
#15
Original Poster
Join Date: Aug 2015
Programs: BA OWS, A3*G
Posts: 262
Ignoring the Covid-related slump in travel, which will either be relatively shortlived or we all have much bigger problems than what happens to a mid-sized airline --- whatever the motivation behind it, LHgroup acquiring TP spells bad news for the travelling public. I wouldn't mind consolidation of smaller EU airlines and have nothing against LH, but a goliath absorbing yet another airline can only lead to less competition.