In the summer of 2025, the government of Portugal relaunched a project to privatize national carrier TAP Air Portugal, with the goal of selling a large stake in the airline. This has of course been a rather drawn out process, and we’ve known that both Air France-KLM and Lufthansa Group had submitted binding offers for such an investment, with a decision expected imminently.
There’s now an update, as the Portuguese government has picked a “winner” in the bidding process…
Lufthansa Group wins bid for TAP Air Portugal investment
Lufthansa Group has won the bid for the purchase of a 44.9% stake in Portuguese flag carrier TAP Air Portugal. Employees will get a 5% stake, while the government will retain a 50.1% stake for the time being. An official announcement was made at the extraordinary cabinet meeting in Portugal today, Wednesday, October 14, 2026.
Why did Lufthansa Group win out over Air France-KLM? Well, it’s because Lufthansa Group is offering an all-cash deal, while Air France-KLM has a proposal that combines cash and shares in the airline group. In the words of Portuguese prime minister Luís Montenegro, Lufthansa Group was chosen because its “financial offer is 16% higher than the rival proposal and carries a lower degree of uncertainty.”
Montenegro went on to say that “the government is successfully bringing to a close the first phase of the privatisation of our national airline,” claiming this was a process “conducted with strict respect for competition, a stringent approach to negotiations and complete transparency vis-à-vis the Portuguese public.”
The transaction will reportedly bring in “1.201 billion euros in this first phase.” Even as the government retains a majority stake in the company, “Lufthansa will be responsible for executive and operational management.” “This is an offer that gives the airline a total valuation of 2.552 billion euros,” described as “a figure far above the independent valuations put forward a few years ago or even just a few months ago.”
There seems to be quite some optimism here, as the prime minister explains “we are ensuring the growth of TAP, the growth of the fleet, the growth in passenger numbers, the growth in destinations and routes, and also the growth in investment, not only in TAP but across the entire aeronautics sector in Portugal.”
Of course an investment like this requires regulatory approval, so I’d expect that even if terms are fully agreed to, things could still change before all authorities sign off on the deal.
What are the implications of Lufthansa Group investing in TAP?
While I understand that Lufthansa Group maybe has stronger financials than Air France-KLM on the surface, I was certainly rooting for Air France-KLM to get the deal. I mean, if nothing else, Air France-KLM does a much better job with labor relations than Lufthansa Group does, and I feel like that should be worth something.
With Lufthansa Group winning the bid for TAP Air Portugal, how is this likely to play out?
- Obviously owning a stake in TAP will greatly strengthen Lufthansa Group’s position in South America (particularly Brazil), where the airline group otherwise isn’t particularly strong
- While TAP is already in the Star Alliance, it’s not in the transatlantic joint venture, so it’ll be interesting to see if an effort is made for the airline to join; currently TAP undercuts the competition on price across the Atlantic, while that would stop if there were antitrust immunity, and fares and schedules are coordinated
- On some level, the incentive for an airline group to acquire another carrier is simply to keep the airline out of the hands of a competitor, given the extent to which long haul European aviation is controlled by the “big three” European airline groups
Bottom line
Lufthansa Group has come out on top of Air France-KLM when it comes to the bidding for TAP Air Portugal. The decision apparently largely came down to Lufthansa Group making an all-cash offer. Both Lufthansa Group and Air France-KLM have the same geographic upside with a TAP investment, though from a labor perspective, I certainly have to imagine this would’ve played out better with Air France-KLM.
What do you make of Lufthansa being the winning bidder for TAP Air Portugal?
Der Kaiser now has:
- Europe cut right down the middle (Brussels, Swiss, Austrian, ITA, Lufthansa);
- its flanks covered (TAP & Luft-Baltic)
- regional service (Air Dolomiti & Lufthansa City)
- LCC & Leisure (Euro Wings & Discover & part of SunExpress)
- auxiliary groups (Lufthansa Technik & Cargo & Systems)
Der Kaiser can no longer think like a Flag carrier. The next step is to:
- adopt...
Der Kaiser now has:
- Europe cut right down the middle (Brussels, Swiss, Austrian, ITA, Lufthansa);
- its flanks covered (TAP & Luft-Baltic)
- regional service (Air Dolomiti & Lufthansa City)
- LCC & Leisure (Euro Wings & Discover & part of SunExpress)
- auxiliary groups (Lufthansa Technik & Cargo & Systems)
Der Kaiser can no longer think like a Flag carrier. The next step is to:
- adopt the mindset of a Mega carrier like DL, UA, or AA
- leverage its eight plus Euro hubs and multiple focus cities via a single dispatch view
- demonstrate that any Euro can get to any place in the world in two flights or less via the holding company and/or Star Alliance
- treat each airline and auxiliary group as an operating unit, not a flag carrier or favorite child
- maintain the local flavor of each airline via a respective President (uniforms, website, native tongue, marketing, PR, etc)
- consolidate all back office operations (purchasing, dispatch, IT, HR, accounting, etc) for economy of scale
- leverage Star Alliance by adopting another US carrier besides UA (Der Kaiser has significant influence as a founding member) as well as other airlines around the world; most every airline is looking for a dance partner at the moment.
- realize there is only space in Europa for two or three mega carriers (Der Kaiser via Star; IA Group via OneWorld; & AF-KLM via SkyTeam) just like North America.
- understand the rest of Europa is eaten up via ULCC (Ryan, EasyJet, SmartWings), and some of these are near the edge of collapse
- rationalize the credit card programs, pick one or two banks and play them off each other
- rationalize the multiple FF programs
Der Kaiser has all his piece on the Chess board.
Now is the time to move a with steady, but deliberate strategy to survive and thrive in the long run.
If not, will end up like another SwissAir that gets gobbled up.
This could potentially open up an interesting opportunity with the TAP Miles & Go program. For the most part, this is a sleeper Capital One transfer partner because it's not a very good program, but if TAP will adopt the Miles and More program (like other Lufthansa Group airlines, and some other affiliated ones like Croatia Airlines) this could be an opportunity to get Miles and More points.
Lufthansa is the king of mediocrity and has a full airline portfolio to show for it (except for maybe OS). They'll ruin the few things that made TP flying a good deal.
The comments here about what competition regulators will or will not do are not grounded in reality. The European Commission is unlikely to block the investment full-stop. Instead, it will look at the need for divestment of slots at Lisbon airport, measures to preserve competition on overlapping routes, and the implications of having TAP joint Lufthansa's trans-Atlantic joint venture.
Sad news. There goes one more European airline...
One point that no one seems to notice is that Lufthansa Technik has been ramping up operations in Portugal with even a training facility & creating jobs there. I’m pretty sure that that contributed to the government’s decision to favor Lufthansa’s bid.
Next: LOT.
It's really sad and I hope regulators will block it. TP offers competitive fares for a far better product than LH. And labour relations are a relevant criteria, too. As a TAP *A Gold this means I have to look elsewhere ...
I think they will. This gives LH group an unfair advantage in southern Europe. They already have ITA, Aegean and now TAP. I thinks regulators will ask for a lot of concessions that LH won’t agree to and will inevitably make them walk away from the deal. The Portuguese government is being very short sighted here.
How do LH have Aegean?
Will be interesting to see how long regulatory approval takes. Not optimistic. Beautiful 747, btw.
All 747 are beautiful. That one, in-particular.
The Good Guys win another one, and DieTeam is prevented from expanding, carrying along with it the evil that is Delta. Don't be charmed by those Delft houses. There's some serious evil churning there.
Very bad news. Another airline swallowed up by the tractor beam into the LH Death Star, where Senator Palpatine (aka Carsten Spohr) can enshittify it to the max.
And you think being in bed with Delta is better. Anything is better then Delta!!!
Nice to see they are choosing LH group over money while the government explicitly said the decision won’t be taken over money… fools
Yay, another airline for Carsten Spohr to neglect, pissing off labor, neglecting customers, and removing all vestiges of the host country's identity in the name of "rationalizing" costs by providing the exact same things as the other airlines in his stable of garbage (SWISS being one minor exception).
It's a pity AFLKLM didn't get it - Ben Smith seems to be quite the miracle worker for the carriers he touches.
No matter how one slices it, TAP and LIS as hub are terrible. Regardless who picks them up. It has the longest distance for any intra-european flights, the usually more comfortable (J|F fares) wide bodies fly shorter (Atlantic) or longer, needing you to backtrack (Asia) for European destinations from said hub. MAD can get away it it, LIS adds that extra half hour and is a terrible airport with no future.
Plus it will...
No matter how one slices it, TAP and LIS as hub are terrible. Regardless who picks them up. It has the longest distance for any intra-european flights, the usually more comfortable (J|F fares) wide bodies fly shorter (Atlantic) or longer, needing you to backtrack (Asia) for European destinations from said hub. MAD can get away it it, LIS adds that extra half hour and is a terrible airport with no future.
Plus it will continue to be ideal place to deploy narrow body airplanes (LR,XLR) over the Atlantic, no thanks.
Even if KLAF or oneWorld would snag TAP, it wouldn't change geography. TAP/LIS will remain what they are, a low cost and low effort options for some places.
If you think TAP is bad now, just wait until Herr Spohr gets his hands on it.
That's a load of rubbish, LIS has an excellent location for the Americas and W. Africa. People don't want to fly all the way to LON/PAR/AMS then backtrack to reach the Iberian peninsula/Italy/Morocco.
I fly TAP regularly from Brazil to Lisbon. They give a good service and have excellent food too. I’m happy LH is the winner so we can continue experiencing Star alliance benefits.
... but be mindful that food will be eliminated (Y) or become inedible (C) and service will become non-existant.
Hey, LH hasn't had a strike since April. No thanks to connecting through CDG!
And besides, now I will be able to get roast goose in chimichuri sauce for Christmas.
Wow...6 months since the last strike becomes a positive argument... :-D
For LH pax that would be positively miraculous!
Portuguese government once again confirming all stereotypes. Bunch of fools (or corruptees, make your own conclusion).
TAP is often the cheapest for transatlantic. If they want to do their job correctly, EU competition authority should not allow them to put their North Atlantic ops in JV. Incidentally, I don't know why people would say TAP offers poor service accross the Atlantic. I have flown them on several occasions, both business and economy, and I was always happy with what I received. The lounges in Lisbon have insufficient capacity and terrible seating...
TAP is often the cheapest for transatlantic. If they want to do their job correctly, EU competition authority should not allow them to put their North Atlantic ops in JV. Incidentally, I don't know why people would say TAP offers poor service accross the Atlantic. I have flown them on several occasions, both business and economy, and I was always happy with what I received. The lounges in Lisbon have insufficient capacity and terrible seating arrangements but the food if great once you manage to get in. Onboard service is very nice, with great food on all aircraft types and nice seating with large screens on A321 neo.
Agree. Service is certainly superior to LH ...
This was nothing more than about gaining in Brazil. For AF/KL they already have a pretty decent route structure to Brazil. Even to secondary markets like Fortaleza and Salvador. I would imagine that AF's bid was more to push LH to offer too much as between AF/KL they could easily add additional routes out of Paris with similar connectivity, better service than TAP, and a more seamless connection than compared to LIS. Further, if LATAM...
This was nothing more than about gaining in Brazil. For AF/KL they already have a pretty decent route structure to Brazil. Even to secondary markets like Fortaleza and Salvador. I would imagine that AF's bid was more to push LH to offer too much as between AF/KL they could easily add additional routes out of Paris with similar connectivity, better service than TAP, and a more seamless connection than compared to LIS. Further, if LATAM gets cozier with Skyteam all bets are off.
LH had to do it, but AF did a great job in making sure they paid well for it.
I know most will think it should’ve gone to KLM with Lufthansa having so many airlines they own, but part of me is tired of these airlines changing alliances so it’s nice for them to be able to stay in star alliance
Yet another cash-strapped country opting for a short-term win. Well I wish all the best to them, with all the job losses and dwindling employee benefits which soon the Portuguese government can pay for. AFKL was the most logical option, and Portugal would've benefitted from its share as Denmark will on the long-term.
The strikes they’re gonna see, it’s gonna be insane! Probably was shut down the whole country. All Lufthansa does is cut cost and staff, when the new airport opens they’ll be way more competition the biggest thing tap airlines fears at the moment as they kept blocking it.
A real shame, I hate to see what sort of Allegris-style stuff and Spohr-driven cost cutting LHG will have TAP do
"On some level, the incentive for an airline group to acquire another carrier is simply to keep the airline out of the hands of a competitor" -- Exactly. And when Lufthansa pays too much for TAP, it has to cut expenses somewhere else: passenger services, staff salaries, or both.
Air France-KLM have to really be kicking themselves for walking away from an Air Europa deal in 2025. Vueling, Iberia, TAP are all partnered up and not a single partner hub west of Paris.
TAP will never be allowed into the transatlantic JV.
TAP should have reflected on LH's treatment of SAS as the poor cousin within Star Aliens Europe - because that will be TAP's fate.
At least with the poor margins within the LH group, TAP has a good chance of being the second best performing carrier within the group.
So that will be 11 unique airlines under the Lufthansa group? They're really becoming the Coca-Cola (or PepsiCo, pick your poison) of airline brands
Don’t forget LH Cargo. And Eurowings Europe (although they operate under EW brand, abut with their own AOC).
One reason Air France has better labour relations is the constant kotowing to the unions. If management just caves in at every whim of the unions then of course relations will be good. I am not sure it always means a better customer experience.
The latest, the cabin attendant union suggested to add an announcements during boarding that passengers close the overhead bins when full. To ease the workload and stress of the cabin...
One reason Air France has better labour relations is the constant kotowing to the unions. If management just caves in at every whim of the unions then of course relations will be good. I am not sure it always means a better customer experience.
The latest, the cabin attendant union suggested to add an announcements during boarding that passengers close the overhead bins when full. To ease the workload and stress of the cabin crew during the boarding process. Management happily accepted.
And people wonder why France is hurtling toward an IMF bailout. Between the unionized workers and the coddled students, no one actually works.
CPH and Jack, huh, I thought those Russian data centers went offline... I guess they're back, since you're parroting the latest anti-EU propaganda. (France is failing! Europe is falling! Ahh!) Tell us how you feel about "Western" civilization... *clutches pearls*
Conflating French bond yields with a cabin crew asking passengers to close overhead bins is peak right-wing internet fear-mongering.
What matters in this story: If we actually care about consumers and workers, we'd prefer...
CPH and Jack, huh, I thought those Russian data centers went offline... I guess they're back, since you're parroting the latest anti-EU propaganda. (France is failing! Europe is falling! Ahh!) Tell us how you feel about "Western" civilization... *clutches pearls*
Conflating French bond yields with a cabin crew asking passengers to close overhead bins is peak right-wing internet fear-mongering.
What matters in this story: If we actually care about consumers and workers, we'd prefer independent carriers like TAP to not be bought up by multinational conglomerates.
Otherwise, sure, AF has had ample strikes over the years, and those wins for labor have been hard fought, hard won, lest we forget; their unions are a strength, not a weakness. But, that's not really the issue in this story.
Conflating France's government debt problems with AF's labor relations is laughable. AF made a 1 billion euro profit last year. LHG lost 350 million on strikes in one quarter alone.
@1990_
I don't think I drew a link from the state of Air Frances labour relations to anything but the airline itself. I might draw a line between the union's demands and the title of a Dire Straits song, but I'll skip that too.
The Air France cabin crew does not even reliably heat bread on European J flights as the union wants to keep work loads down.
My only point was to Ben's...
@1990_
I don't think I drew a link from the state of Air Frances labour relations to anything but the airline itself. I might draw a line between the union's demands and the title of a Dire Straits song, but I'll skip that too.
The Air France cabin crew does not even reliably heat bread on European J flights as the union wants to keep work loads down.
My only point was to Ben's statement that Air France (now) seems to have the better labour relations, it does not necessarily mean better experience for the customers.
And on that point, Lufthansa Group only seems to be at war with the Lufthansa employees, less so with the Swiss, ITA etc. Employees.
Yes Air France has had their fair share of strikes and labour/management altercations. Who does not remember when AF executives had to escape over a fence while the employees literally tore their suite jackets and shirts of their backs. Don't think Lufti can top that. Yet. :)
@CPH-Flyer, as I am also a fan of the band, I must say: citing 'Money for Nothing' as your sick burn is ironic when you realize the song is actually mocking a bitter guy complaining "That ain't workin'!" because people are doing their jobs differently than he thinks they should.
And, if you're going to point fingers at flight attendants for managing their workload, remember what Knopfler sang on Solid Rock: "When you point your...
@CPH-Flyer, as I am also a fan of the band, I must say: citing 'Money for Nothing' as your sick burn is ironic when you realize the song is actually mocking a bitter guy complaining "That ain't workin'!" because people are doing their jobs differently than he thinks they should.
And, if you're going to point fingers at flight attendants for managing their workload, remember what Knopfler sang on Solid Rock: "When you point your finger 'cause your plan fell through, you got three more fingers pointing back at you."
Aside from a 2015 shirt-ripping incident, I still think strong labor standards make for a better workforce in aviation (in Europe and elsewhere); burnout and high turnover help no one. Likewise, consumers would benefit if there was less, not more, consolidation in the industry.
I'm gonna re-listen to Brothers in Arms (1985), because the album basically covered the slick talkers of that era (very applicable to today). So, when I see folks trying to blame unions, it just feels like... 'Your Latest Trick' to me.
@1990_
I am not anti union, I am in general pro union. But like all good things, they need to be applied in the right measure, and with the appropriate checks and balances applied. Management does need to be a counter balance. If I had to mention my prime example of unions gone too far I'd say look at the story of Scandinavian Airlines. Though the Air France unions would not be far behind on the list....
Closing the overhead bins when you use the last spot is just common courtesy for the next passengers...!
@Nic123
Yes and no. Passengers often have a slightly misguided view on what full is. Full for a lot of people means their stuff is up, and they don't want more stuff put in next to it....
And honestly, people will spend more time opening them again to verify that they are actually full as opposed to just observing they are full.....
CPH, I do actually prefer your hot-take on the bins at least.
...and to the cabin attendants. Amen!
So you could say, they’d TAP that…
Lufthansa winning this bid is a total joke.
Such a dark day in aviation history :'(
LufTAPsa
I can't say I'm sad that TAP will remain in the Star Alliance rather than the Misfit Toys Alliance. That said, TAP is a mediocre-at-best airline with a terrible hub airport.
Air France-KLM is already a major player on Europe to South America routes, especially to Brazil, whereas Lufthansa is relatively weak. Therefore, Lufthansa needs Lisbon as a hub for South America and Brazil more than Air France-KLM does. In a crisis environment, which happens often in the airline sector, Lufthansa is more likely to preserve Lisbon as a hub whereas Air France-KLM would retreat to Paris for South American services. The Portuguese Government with a...
Air France-KLM is already a major player on Europe to South America routes, especially to Brazil, whereas Lufthansa is relatively weak. Therefore, Lufthansa needs Lisbon as a hub for South America and Brazil more than Air France-KLM does. In a crisis environment, which happens often in the airline sector, Lufthansa is more likely to preserve Lisbon as a hub whereas Air France-KLM would retreat to Paris for South American services. The Portuguese Government with a majority stake plus labour with a 5% stake, however, would not allow this, which is why TAP is not an attractive investment and why IAG pulled out. Synergies are likely to be small as a result. This is not a merger or privatisation, just an acquisition of a large minority stake.
So the big become even more bigger. How is that good for the consumer ?
Progressive EU hypocrisy baby.
Now that's propaganda.
This is not very good news - I’m a Delta Million Miler and was hoping for Air France-KLM to
win the bid and eventually have TAP become
part of Skyteam. Moreover I like TAP and despise Lufthansa’s lack of schedule consistency - and especially how they have so many strikes that shut down operations and have so little disregard for their customers that are affected. Who in their right mind knowing all this...
This is not very good news - I’m a Delta Million Miler and was hoping for Air France-KLM to
win the bid and eventually have TAP become
part of Skyteam. Moreover I like TAP and despise Lufthansa’s lack of schedule consistency - and especially how they have so many strikes that shut down operations and have so little disregard for their customers that are affected. Who in their right mind knowing all this would want to fly with them? Especially if you are originating or connecting through Germany?
Hey, LH hasn't had a strike since April. No thanks to connecting through CDG!
And besides, now I will be able to get roast goose in chimichuri sauce for Christmas.
So little disregard for customers? Was that a double negation...minus and minus becoming plus? :-p
Aw, poor Delta fanboy. My heart bleeds for you.
Well this is unfortunate... definitely a short-sighted move to go with Lufthansa because their offer is all-cash. Hopefully AF-KLM can counter. Otherwise, best of luck being a second-tier member of LH Group, TAP.
Oh Crap !
Not sure why the "labor relations" is the factor that was brought up for this discussion but yeah, I would've also far preferred AF-KLM. They are just better airlines, better flag carriers, better cultural symbols, far bigger and standout identities. And, say what you will about TAP, but it has a personality. They should be working with someone bolstering it, not suppressing while losing your luggage.
Labor relations is huge here! Air France/KLM
has had little strife since management changes almost a decade ago so, few disruptions due to employee strikes. Lufthansa on the other hand, seems to strike every other week - making them undependable to many travellers. WHO wants to book ahead not knowing with 99% certainty that a strike could happen (and does often with Lufthansa) - and then you get a shoulder-shrug of indifference from them...
Labor relations is huge here! Air France/KLM
has had little strife since management changes almost a decade ago so, few disruptions due to employee strikes. Lufthansa on the other hand, seems to strike every other week - making them undependable to many travellers. WHO wants to book ahead not knowing with 99% certainty that a strike could happen (and does often with Lufthansa) - and then you get a shoulder-shrug of indifference from them like ‘oh well’. I don’t want to take that risk (which is huge)
Syd clearly doesn't live in Europe...
You'd be surprised by how much time I spend there. Also, "the guy just doesn't understand how bad the bureaucracy is down here" is an indictment of Europe, not of my lack of knowledge about it.
You are probably a wonderful chap in person and I truly feel bad commenting on this, but "the guy just doesn't understand how bad the bureaucracy is down here" just proves the previous statement.
Americans call it "bureaucracy" and "unionised socialism". We call it human decency & quality of life. Someone who at KLM today still has the opportunity to stay with the company for life, buy property in the suburbs, have a family and...
You are probably a wonderful chap in person and I truly feel bad commenting on this, but "the guy just doesn't understand how bad the bureaucracy is down here" just proves the previous statement.
Americans call it "bureaucracy" and "unionised socialism". We call it human decency & quality of life. Someone who at KLM today still has the opportunity to stay with the company for life, buy property in the suburbs, have a family and retire well. Ground crew with seniority have to opportunity to transfer to operational positions or cabin crew positions in the last decades of service, starting at the bottom but keeping senior salaries.
Not a chance any of this is possible at Iberia or Lufthansa anymore, those opportunities died in the early 2000's there. IAG & LH Group have become soulless profit machines in the American image. Sad to see ITA and TAP go the same direction.
I fully agree with you on goals and ideals. And I guess i agree with you on other things too - Europe cannot have a truly free airline market, it would very quickly turn into something like Luft-AF-BA-Ryanair-easyjet with others bought or squeezed out. In that sense and environment, where an airline is a mix of a for profit venture but is also heavily guarded by the government it's only fair to expect it to...
I fully agree with you on goals and ideals. And I guess i agree with you on other things too - Europe cannot have a truly free airline market, it would very quickly turn into something like Luft-AF-BA-Ryanair-easyjet with others bought or squeezed out. In that sense and environment, where an airline is a mix of a for profit venture but is also heavily guarded by the government it's only fair to expect it to provide the best living possible for those it employs. I would argue, however, that truly openly competing Luft-AF-BA-Ryanair-easyjet would on average offer better service, lower prices, and better wages to an average employee and client.
Government aid has fixed rules, basically you can't have a government-financed airline at all. At most, a temporary scheme may be provided to get through "tough times". As for LHG "owning so many airlines", it's really one airline just with different brands. In the US you have the big 3 operating everything under one brand, in Europe it's split into smaller local brands for historical reasons, but otherwise it's the same concept. Plus in Europe...
Government aid has fixed rules, basically you can't have a government-financed airline at all. At most, a temporary scheme may be provided to get through "tough times". As for LHG "owning so many airlines", it's really one airline just with different brands. In the US you have the big 3 operating everything under one brand, in Europe it's split into smaller local brands for historical reasons, but otherwise it's the same concept. Plus in Europe we also have strong LCCs in addition to the big 3.
Unlike ITA (which never should have been approved by EC), I don't see much problem with LHG acquiring TAP. There is no geographic overlap. It would be sad to see TAP brought down to LHG standards, as they're a pretty nice airline, but I don't see a problem with such transaction. For IAG on the other hand it would be virtually impossible to get approval since Iberia is just around the corner, serving more or...
Unlike ITA (which never should have been approved by EC), I don't see much problem with LHG acquiring TAP. There is no geographic overlap. It would be sad to see TAP brought down to LHG standards, as they're a pretty nice airline, but I don't see a problem with such transaction. For IAG on the other hand it would be virtually impossible to get approval since Iberia is just around the corner, serving more or less the same market. AFKL buying TAP would be very nice and probably not problematic, but they are currently spending their cash on SAS so I don't see this very likely.
Out of the major three European groups Lufthansa Group buying TAP wouldn't be good for passengers. Especially after their pursuit of ITA. Starting with Lufthansa's awful choices in catering and ending with TAPs role in keeping fares competitive not just to South America but also North America and within Europe.
Government aid would break EU rules, but an airline owning so many European airlines isn't a problem? Lufthansa excels at being mediocre. That said, the appeal of TP is undeniable. Demand to / from Portugal is off the charts, and its not just LIS (which is an awful hub for transfers) but also OPO. LH would benefit from TP's exposure to Brazil and would keep TP in Star Alliance.