Flying towards consolidation

: an analysis of the potential acquisition of TAP Air Portugal by Lufthansa Group

Abstract

This thesis examines the potential acquisition of TAP Air Portugal by the Lufthansa Group in the light of ongoing consolidation in the European aviation industry. Following TAP's stabilization after COVID and the announced reprivatization, Lufthansa is emerging as a key candidate for the takeover to strengthen its multi-brand and multi-hub strategy. The study starts with a review of theoretical concepts related to mergers and acquisitions (M&A), including motives, success factors, and valuation methods. A comprehensive analysis of the European aviation sector reveals increasing financial pressure, changing consumer preferences, and the strategic need for consolidation. Company-specific analyses of Lufthansa and TAP shed light on their operational performance, strategic positioning, and financial structures. Stand-alone valuations are performed for both companies using the discounted cash flow and relative valuation methods. Finally, a transaction scenario is developed to assess synergy potential, financing aspects, and regulatory risks. The results indicate that TAP's strong presence on transatlantic routes, particularly between Europe and Brazil, and its strategically located hub in Lisbon could represent significant added value for Lufthansa. Operational and financial synergies are identified, particularly in the areas of fleet integration, route optimization, and procurement. Despite identifiable risks, including regulatory controls and political uncertainties, the analysis concludes that the acquisition has the potential to create long-term value for Lufthansa shareholders. This case is another example of the strategic use of M&A to address structural challenges in the European aviation landscape.

Date of Award	10 Jul 2025
Original language	English
Awarding Institution	Universidade Católica Portuguesa
Supervisor	António Borges de Assunção (Supervisor)