Lufthansa CEO says there's little flight network overlap in TAP deal ahead of Brussels review

Lufthansa Sees Limited Overlap with TAP Ahead of Antitrust Review

Lufthansa's Acquisition of TAP: Market Impact and Regulatory Considerations

By Sergio Goncalves

Overview of the Acquisition Deal

LISBON, Nov 3 (Reuters) - Lufthansa and Portuguese flag carrier TAP have limited overlap in their flight networks, though it is too early to discuss potential antitrust remedies tied to Lufthansa's planned acquisition of up to 49.9% of TAP, Chief Executive Carsten Spohr said on Tuesday.    

The deal, which needs antitrust approval from the European Commission, would make Lisbon Lufthansa's long-haul gateway to the South Atlantic and more than double its share of the Europe-Latin America market.

Financial Details and Bidding Process

On October 14, the Portuguese government picked Lufthansa's €1.2 billion ($1.34 billion) bid for up to 49.9% of TAP. The German carrier has also offered €863 million in cash and a 5% stake in the Lufthansa Group, valued at €488 million, for the state's remaining 50.1% holding, should the government decide to sell that stake.

Lufthansa, which already owns Austrian Airlines, ITA Airways and Swiss among other carriers, beat rival Air France-KLM after both airlines submitted final bids in late September.

Antitrust Review and Potential Remedies

Regulatory Approach and Experience

Spohr said Lufthansa would approach any remedy talks with the European Commission and the Portuguese government "in a professional way", citing the group's experience with investments in other European airlines.

Assessment of Network Overlap

"About potential overlaps, we believe they are fairly limited due to the fact that the markets of TAP and Lufthansa Group are not overlapping to a high extent," Spohr told reporters after signing the TAP acquisition agreement with the Portuguese government.

"It's too early to talk about certain remedies," he said. 

Strategic Value of TAP for Lufthansa

Network Complementarity and Growth Opportunities

"Our networks complement each other ideally and open up new growth opportunities for us in Portugal and in particular in South America and Brazil", Spohr said.

TAP's main appeal is its valuable landing slots connecting Lisbon with Brazil, Portuguese-speaking Africa and the US, routes that underpin Portugal's diaspora ties, tourism flows and investment links.

Expansion of Lufthansa's Hub Network

Lisbon would become Lufthansa's seventh hub, with airports in Porto, the Azores, Madeira and the Algarve also playing key roles in the group's growth strategy, Spohr said.

Market Share Implications

The deal would raise Lufthansa's share of the Europe-Latin America market to about 20% from 9% currently, "bringing the German group in line with its key competitors", Spohr said.

($1 = 0.8935 euros)

(Reporting by Sergio Goncalves; Editing by Rod Nickel)