Air France-KLM’s Q2 profit paves way for potential involvement in TAP privatization

  • Air France-KLM shows interest in TAP, emphasizing commercial strategy control while mulling stake percentages.
  • CEO Ben Smith highlights the brand's significance, Lisbon hub, and unique routes of TAP, resonating with Air France-KLM's operational ethos.
  • Competitors like IAG group and Lufthansa also display interest in TAP, while Air France-KLM reports a substantial profit in the second trimester.

LISBON —Air France-KLM, after showcasing impressive Q2 financials, is gearing up for a strategic bid in the race for TAP’s privatization, The Portugal News reports. Notably, the airline giant announced a profit of 604 million euros for the second quarter, following a contrasting first-trimester loss. This buoyed half-yearly net profit, standing at 260 million euros, has set the stage for their potential stake in TAP.

CEO Ben Smith, in a recent press conference, underscored Air France-KLM's intent and strategic alignment with TAP. He extolled TAP's rich 80-year legacy, its unique routes, and Portugal’s robust operational competence, suggesting a harmonious merger of values. Drawing parallels with Air France-KLM’s European formation, Smith emphasized global brand preservation, reinforced investment, and sustained route enhancement as critical touchstones.

The airline has already onboarded judicial and financial consultants, aiming to be ahead in the privatisation game. Smith elucidated their strategic objective, emphasizing the significance of controlling commercial direction. "When we enter this transaction, we want to align strategically. The percentage of stake matters less than the rights we acquire," Smith commented.

While the interest from Air France-KLM is palpable, they aren't the sole major players vying for TAP. Other aviation stalwarts, including the IAG group, housing British Airways and Iberia, and Lufthansa, are also displaying their intent. Highlighting the competition, the IAG group’s CEO, Luis Gallego, recently convened with Portuguese decision-makers, signifying their interest.

Finance Minister Fernando Medina outlined his vision for TAP's future, emphasizing its strategic significance to the Portuguese economy. Medina's insights hinted at preserving TAP's Lisbon hub, reinforcing the company’s independent status, and charting an aggressive growth trajectory—tenets that Smith acknowledged are in line with Air France-KLM's modus operandi.

As the race intensifies, the Minister of Finance's upcoming reprivatisation decree in September is eagerly awaited. This directive is expected to elucidate the criteria and conditions, setting the stage for the next phase of this privatisation saga. In the backdrop, Air France-KLM's strengthening financial position, marked by their recent deal with Apollo Global Management, further elevates their candidacy in the ongoing privatisation process.