The Portuguese government said Thursday it decided to sell control of its national carrier, TAP Air Portugal, to an investor group led by David Neeleman, the founder of Brazil’s third-largest airline.
Mr. Neeleman started Azul Linhas Aereas Brasileiras SA and founded U.S. airline JetBlue. He and Latin American tycoon German Efromovich, owner of Avianca Taca Holding SA, had bid for 61% of the Portuguese company.
The Portuguese government offered 66% of the company—5% to its employees. This was the Portuguese government’s second attempt to sell the indebted airline.
In 2012, Mr. Efromovich, through Avianca’s controlling company Synergy Group Corp., offered 35 million euros for 95% of the airline, plus a capital injection of €316 million and the assumption of about €1.1 billion in debt held by TAP. His offer was refused because it didn’t meet some financial conditions.
This time around, both the bids were viable, but the offer by Mr. Neeleman’s group better responded to short-term challenges faced by TAP, Portuguese Secretary of Transport Sergio Monteiro said in a news conference.
The winning group, known as Gateway, will pay a minimum of €354 million ($398 million) and a maximum of €488 million for control of TAP, and will also provide 53 additional planes for TAP, according to Portuguese officials.
Brazilian-American businessman Mr. Neeleman has said he plans to keep the carrier separate from Azul for legal reasons, but will create an alliance to allow the companies to work together
TAP´ s sale is part of a multibillion-euro privatization program Portugal undertook as part of a three-year, €78 billion international bailout program, which ended this year.
Mr. Neeleman´ s group agreed to keep TAP based in Portugal for at least 10 years and to maintain the country as the airline’s main hub for a minimum of 30 years, Mr. Monteiro said.
Azul flies to more than 100 destinations, including destinations in Brazil and the U.S. TAP operates flights to 82 destinations. The carrier’s extensive routes linking Europe to Brazil make it an attractive property particularly for Azul´ s founder.
In a note, Azul said that the acquisition is “a good opportunity for Brazil” because Portugal is the main portal for the estimated 1.8 million people flying between Brazil and Europe every month.
But Mr. Neeleman has some challenges ahead of him.
TAP, which includes the airline and a maintenance unit in Brazil, reported a €85.1 million loss for 2014, compared with a loss of €5.9 million in the previous year. Strikes and leasing costs hurt operations. It reported €1.06 billion in debt.
Eduardo Correia and Patricia Kowsmann in Lisbon contributed to this article.
Luciana Magalhaes -Down Jones Newswires
