Lufthansa Group and the Portuguese government have signed an agreement for the German aviation conglomerate to acquire a 44.9% minority stake in TAP Air Portugal (TP, Lisbon) for EUR1.025 billion euros (USD1.15 billion).

The investment will be financed entirely from available liquidity. Through the potential acquisition of shares initially offered to employees, the Lufthansa parent could increase its stake to up to 49.9%, taking the total purchase price to as much as EUR1.2 billion (USD1.34 billion), the group said in a statement.

Furthermore, the company said it "expressly welcomes the prospect of a full privatisation" of the state-owned carrier. A majority stake would offer "additional opportunities to accelerate TAP's growth, strengthen its competitiveness, and unlock further potential within the airline group".

The addition of TAP Air Portugal would increase the group's market share in the Europe-Latin America segment from 9% to approximately 20%. It would also establish Lisbon as Lufthansa Group's seventh hub. In addition, Porto, the Azores, Madeira, and the Algarve are integral parts of the group's growth strategy, it said.

"Our networks complement each other ideally and open up new growth opportunities for us in Portugal and in particular in South America and Brazil. Together with TAP's employees, we want to continue the airline's success story, preserve its Portuguese identity and develop Lisbon into a Lufthansa Group hub," said Carsten Spohr, the group's chairman of the executive board and chief executive.

TAP's chief executive officer, Luís Rodrigues, recently said that the most challenging part of the process was yet to come: obtaining the necessary approvals from European authorities. However, he added that Lufthansa Group had the experience needed to secure regulatory clearance, having previously completed several acquisitions of European airlines, most recently ITA Airways.

ch-aviation fleets data shows that TAP Air Portugal operates 87 aircraft, comprising three A319-100s, fourteen A320-200s, nineteen A320-200Ns, three A321-200s, six A321-200Ns, seven A321-200NX, thirteen A321-200NX(LR)s, three A330-200s, and nineteen A330-900Ns.

Lufthansa Group wholly owns Lufthansa, Air Dolomiti, Austrian Airlines, Brussels Airlines, Discover Airlines, Edelweiss Air, Eurowings, and Swiss.