By Patricia Kowsmann
LISBON--International Consolidated Airlines Group SA (ICAGY,
IAG.MC, IAG.LN) and Deutsche Lufthansa AG (DLAKY, LHA.XE) didn't
put in bids for Portugal's TAP SGPS SA, highlighting the challenges
the Portuguese government faces in trying to sell the airline amid
difficult conditions in the sector.
The first round of bids were due Friday. Both IAG--the parent
company of British Airways and Spain's Iberia--and Lufthansa have
expressed preliminary interest in TAP. An IAG spokeswoman said
Monday the company's interest faded over the past months.
The company's Iberia operation is having a lackluster
performance, as Spain has grappled this year with a major banking
crisis. In August, IAG warned it expects to make a small loss for
the year.
Lufthansa also didn't bid for TAP, people familiar with the
situation said.
The company has said it is focused on managing its current
businesses and costs.
The Portuguese government needs to sell the TAP by the end of
the year under a requirements of its bailout program, but the
timing is tricky. Most of Europe's flag carriers battle with
uneconomical domestic operations on which they rely to feed traffic
to more-lucrative long-haul destinations, where competition from
Asian rivals is heating up.
TAP is worth around 1.2 billion euros ($1.6 billion) if valued
on a multiple of eight times earnings before interest, taxes,
depreciation and amortization in 2011, the average multiple of
recent deals in the sector, according to government and airline
officials.
The airline is a potentially attractive asset because of its
leading share of traffic between the fast-growing market in Brazil,
a former Portuguese colony, and Europe.
Write to Patricia Kowsmann at patricia.kowsmann@dowjones.com