Portugal's two main carriers, which have discussed merging several times over the years, began a new round of talks in late August. "There have been talks for so long but for some reason they always fell through," says Portugalia general manager operations Luiz Placido Lapa. "It looks like this time it will go forward."
TAP declined to comment other than to say "negotiations are being carried out and that a decision is expected to be known soon". Government-owned TAP seeks to bolster its feed traffic at its Lisbon hub while Portugalia's majority owner, Grupo Espirito Santo, is looking to exit the aviation market.
TAP and Portugalia now compete against each on major domestic routes as well as to other European countries including Spain, France and Italy. Acquiring Portugalia would add significantly to TAP's already industry-leading market share in all these sectors (see chart). TAP would become Portugal's dominant carrier and only face local competition on routes to the Azores Islands from SATA. However, securing approval from Portuguese competition authorities and the European Union is not expected to be a serious challenge.
Lapa says "it looks like TAP intends to keep Portugalia as a separate company" and retain its branding. Portugalia operates six Fokker 100s and eight Embraer ERJ-145s, which TAP could use on thinner routes and to boost frequencies to short-haul business destinations. TAP's smallest aircraft is the Airbus A319.
"I believe it (the sale to TAP) will be a great opportunity for Portugalia to grow," Lapa says.
But he says if the sale is completed Portugalia would have to drop plans announced earlier this year to join SkyTeam as an associate member because larger TAP is part of Star.
Source: Airline Business
