Portugal says strategy, not just price, will decide TAP stake buyer

By Sergio Goncalves

LISBON, July 15 (Reuters) - Portugal's choice of a buyer of a minority stake in flag carrier TAP is a strategic decision that will depend on more than the bid price, the country's infrastructure minister said on Wednesday, as Air France-KLM and Lufthansa prepare to make binding offers.

Portugal relaunched TAP's long-delayed privatisation in July, aiming to sell a 44.9% stake to a strategic airline partner to strengthen its global reach and competitiveness, while reserving 5% for employees.

The government has asked Lufthansa and Air France-KLM to submit binding bids by July 29 after the two airlines emerged as the sole contenders, with initial offers it deemed "largely equivalent and very ambitious" across strategic, industrial and financial criteria.

Infrastructure Minister Miguel Pinto Luz said that a proposal of that nature was inherently complex and involved numerous factors. 

He did not elaborate on the factors but the government has said bidders must commit to strengthening TAP's operations and route network not only at its Lisbon hub but also across Portugal's nine other airports, including Porto, Faro in the Algarve, and the archipelagos of the Azores and Madeira.

"This is a strategic decision that should not be reduced to price alone and therefore requires careful consideration and discretion," Pinto Luz told a parliamentary committee.

TAP's main attraction is its prime and lucrative slots connecting its Lisbon hub with Brazil, Portuguese-speaking African countries, and the United States.

After receiving binding bids, state holding company Parpublica has 30 days to submit a final report assessing their merits to the government, which can then either choose a winner or open negotiations with one or both bidders for improved final offers.

The government is expected to decide on a winner later this year.

(Reporting by Sergio Goncalves; Editing by Emelia Sithole-Matarise)