International Airlines Group, British Airways' parent, has warned it will withdraw its bid for Portuguese carrier TAP unless Portugal relaxes rules preventing majority control. The three-way auction pits IAG against Air France-KLM and Lufthansa, with bids due by April 2. The 45% stake for sale is expected to fetch approximately €700 million.

IAG seeks to integrate TAP's Brazilian routes into its network that includes Iberia, strengthening its presence on lucrative south Atlantic routes. Portugal wants to protect TAP's operations and Lisbon's hub status while attracting a long-term investor. The government had considered selling up to 100% but now plans to offload 49.9% with 5% reserved for employees.

TAP was nationalized in 2020 after receiving €3.2 billion in pandemic rescue aid, following its 2015 privatization. All three European carriers find TAP's South American and African connections valuable. Air France-KLM's CEO Benjamin Smith noted his company's experience with state shareholders as an advantage while Lufthansa integrates Italy's ITA airline.