Lisbon has selected German airline Lufthansa to acquire a nearly half stake in TAP Air Portugal, marking a significant step in the partial privatisation of the state-owned carrier. Portuguese Prime Minister Luis Montenegro announced on Wednesday that Lufthansa was chosen after months of negotiations, offering 1.025 billion euros ($1.14 billion) for a 44.9 percent share in the airline.

TAP Air Portugal was renationalised in 2020 amid substantial financial losses triggered by the COVID-19 pandemic and related lockdowns. It remains one of the few European airlines still majority-owned by its government. Under the terms of the deal, the Portuguese state will retain a controlling 50.1 percent stake, while employees will maintain a 5 percent shareholding.

The government emphasized its intention to preserve Lisbon’s role as a strategic connecting point for flights between Europe, Brazil, and Africa. Maintaining TAP's headquarters in Portugal is also a priority, underscoring the importance of the airline to the country’s transportation infrastructure and international connectivity.

Lufthansa’s acquisition is expected to bring increased investment and operational expertise to TAP, potentially strengthening the airline’s position in a competitive market. The move follows a broader trend among European governments seeking private partnerships to stabilise and modernise flag carriers while retaining some level of control over national aviation assets.