The Portuguese state is set to resume control of TAP Portugal (Lisbon) following the signing this past weekend, of a Memorandum of Understanding with Atlantic Gateway, the US/Brazilian-Portuguese consortium which won a tender to acquire a 61% stake in the airline last year.

Portuguese Prime Minister António Costa said in a statement issued Saturday that after tough negotiations, Atlantic Gateway had agreed to sell the state a 16% shareholding in TAP for EUR1.9 million (USD2.12 million) thus bringing the airline back under government control. As it stands, Lisbon would hold 50% of TAP's total stock (up from 34%), Gateway would hold 45%, with the remaining 5% in the hands of TAP employees.

The state, which has also pledged to keep its shareholding in TAP at no more than 50%, will also be able to appoint six of the airline's board members with the other six to be appointed by Gateway. The executive committee will have three members appointed by individual shareholders. Lisbon says it will not intervene in the daily runnings of the airline allowing it to function as a private entity.

Costa said he was confident about TAP's future prospects because in his view, the partners have a "common interest about what is good for TAP which is ultimately good for the country." He added that buyers' rights had been "guaranteed", showing that "Portugal respects the rule of law and seeks foreign direct investment."

According to the AFP, TAP chairman Fernando Pinto has warned, however, that it would be "very difficult" to reverse the privatization, noting that of the EUR180 million Gateway has injected into the airline thus far, half has already been spent.

As part of its election campaign, Costa's socialist coalition pledged to roll back the privatizations that the previous Pedro Coelho administration had embarked on.