Portugal gets preliminary valuation reports on TAP before sale

Portugal’s government has received preliminary reports from the two independent assessors hired to determine the value of TAP SA, a crucial step before moving ahead with the state-owned carrier’s sale. 

Ernst & Young and Banco Finantia have submitted preliminary drafts of their valuation reports to Parpublica, the state-holding company through which the government owns TAP, according to people familiar with the process. The assessments are still under discussion and the government has yet to receive final versions of these reports, the people said. 

A representative for Parpublica declined to comment and a spokeswoman at the Finance Ministry in Portugal, which oversees TAP, was not immediately available to comment. A spokeswoman for Ernst & Young also declined to comment. 

The long-awaited valuation reports are required for Portugal to start the privatization of TAP, which received more than €2 billion ($2.1 billion) in state aid to survive during the coronavirus pandemic. The government plans to approve privatization of TAP at a cabinet meeting this month and complete the carrier’s sale during the first half of 2024, Portugal’s Secretary of State for Finance, Joao Nuno Mendes, told business daily Jornal de Negocios in July. 

Air France-KLM, Deutsche Lufthansa AG and IAG, the parent company of British Airways and Iberia, have said they may consider TAP. The Lisbon-based airline’s biggest attraction lies in its links to Brazil, of which it’s the biggest European provider. It also maintains a strong presence in Africa and operates a number of flights to North America. 

The valuation reports are based on data from 2022, said one of the people, who declined to provide details about TAP’s market value because the information is confidential. Last year, TAP posted net income of €66 million, its first annual profit since 2017. The appetite for air travel has remained strong , with TAP’s passenger numbers rising 30% in the first half, the carrier said in a regulatory filing on Aug. 30.

The government, which owns 100% of TAP, plans to keep a stake in the airline after privatization to ensure that “strategic objectives” are met, including the goal of keeping Portugal as its main hub, Prime Minister Antonio Costa said in March.