Ladies and gentlemen, Welcome to the conference call and live webcast of Lufthansa Group regarding the TAP Air Portugal privatization process. My name is Sharon and I am the conference call operator. I would like to remind you that all participants will be in a listen-only mode and the conference is being recorded. The presentation will be followed by a question and answer session. You can register for questions at any time by pressing star one and one on your telephone. The conference must not be recorded for publication or broadcast. I would now like to hand the conference over to Marc- Dominik Nettesheim, Head of Investor Relations. Please go ahead.
Thanks, Sharon, for welcoming us and also from our end, a very warm welcome to our analyst call today. On that note, also a very warm welcome to the journalists who have dialed into call. Happy to have you here. Bear in mind that you are dialed in in listening mode only. I am sitting here together with our CEO, Carsten Spohr, and our CFO, Till Streichert. They are happy to comment and discuss yesterday's decision by the Portuguese government to select the Lufthansa Group offer in the TAP privatization process. Please bear in mind that this is the only topic we will discuss today. All other topics related to investor relations, we are happy to discuss after our Q3 reporting after 3rd of November. At the end of this call, we are happy to take your questions.
Please bear in mind that you should limit yourself to only one question per person so that everybody has a chance to ask his or her questions. With that, I hand over to you, Carsten.
Thank you, Marc, and a warm welcome from me and from this room here where we are, if I may say, sitting in positive spirits because, this topic, which we like to take you through for a few minutes now before taking your questions, obviously has been one which has been done through a highly, if I may say, professional competitive process over the last year. Also best regards to Portugal, to those who were in charge of this process, which we considered as highly professional. As you know, we have been through quite a few in the history of Lufthansa. Also greetings to Paris, our competitor who is not only our competitor when it comes to Portugal and Brazil, but who is our toughest competitor in terms of overlap of our networks.
I think did this in a fair and a professional way. I'd like to thank everybody involved for this. Greeting Portugal, which is now on their way to become a member of the Lufthansa family. We're not starting from scratch, obviously with many years in Star Alliance, but when it comes to our strategy, this acquisition ticks many, many boxes. It's obvious that we are looking at something which will create immediate value for our shareholders due to the fact that we are buying a profitable airline. If I recall it right, this is the first time ever we buy a profitable airline. I think any other airline which we have acquired over the years usually had to be turned around by us.
Whereas here we actually seek an airline, which the current margin is even more profitable than the airlines in our portfolio as they are today. Surely based on the most modern fleet of all airlines, we'll come to that, but also through the good work which has been done in TAP over the years. It's also obvious that we not only are looking at one of the most attractive growth economies in Europe with Portugal, but we are looking beyond obviously Latin America and another gateway to Latin America, especially to Brazil, is on the plus point of our strategy being fulfilled here. We want to become more international. We want to rely less on production out of Germany. This is what we have told you also all in our capital markets day. Again, this acquisition fits that in many, many ways.
My favorite number, if I may take you through that currently Lufthansa only has a market share to Latin America between Europe and Latin America of 6%, which is only the sixth largest, sorry, 9%, but it's only the sixth largest of all players on the South Atlantic. Together with TAP, we will get to 20%, which will bring us on par with our strongest competitor to Latin America, which is obviously IAG. This ticking many boxes, I think is something which makes us convinced that it was right to go into this process with a lot of commitment. Also when we talk about the financial commitment very soon, you'll see that we have done our numbers and know what we are doing.
Maybe back to slide 3 for a moment, which also, and I'm fully aware that be it as an analyst or financial expert or as a journalist who covers our industry, this industry is not an industry where there is numerous M&A targets and you tick them one after the other. This is also an industry where the opportunity has to arise to do an M&A transaction because any M&A transaction in our industry is driven by strategy, not only by the value of the target. It's obvious that TAP was and is one of the very few remaining European networks carriers at scale to be consolidated and therefore not only the perfect fit in terms of geographics and markets, but also the fact that Lufthansa can go in further in maintaining our number one position in maintaining the most diverse hub portfolio in Europe.
Of course, TAP was an opportunity we couldn't miss. It is, if you look at the hub structure in Europe, obviously the most western hub now for us beyond Boeing, the most southern hub. That is obviously that, but also we explained to the Portuguese the fit is perfect from the other side. TAP will play a much stronger role in our multi-hub network than they could have played at anybody else's. That usually creates a win-win. Brazil is the market we strongly believe in. Lufthansa has been strong in Brazil since the '30s. We believe, as I said in other occasions, that the Southern Hemisphere will play a stronger role in the future, and this is a generational decision to take. We don't do this for the next two, three, four years.
This is something where you have to think in decades when it comes to consolidation. So this, we strongly believe, is something which will create value for many, many decades to come. As I mentioned before, the target in itself is interesting. TAP has a 46% share in Lisbon. They are operating one of the, maybe the youngest and most modern fleet in the world, which will also help us in the Lufthansa Group to bring down further fleet age, the number of new tech aircraft, even though we are the strongest fleet modernization ever in ourselves. MRO, as you know, a strong pillar of the Lufthansa Group, is also a strong pillar, not only for TAP, but also in Portugal. Highly qualified labor, which actually was the reason why Lufthansa Technik years ago decided to open the facility near Porto.
And of course, now we're going to put the capabilities of TAP and of Lufthansa Technik together. The strong and local customer base, which TAP enjoys as part of Star Alliance, of course, will allow us now to go further, to bring further opportunities also for our customers, starting, of course, from optimizing flight schedules all the way to optimizing loyalty elements. With that, let me move to the next chart, where I think most elements either have been mentioned by me or are self-explanatory. It is something where networks fit perfect. It is a hub which is not only as a Lisbon hub, something we have looked at, but also Porto is growing both catchment, but also partly having opportunity towards Brazil and North America. Any of you who have been to Portugal lately, you'll be surprised how many American friends are enjoying either investments there or their vacation.
This is not only about the South Atlantic, also about the North Atlantic, where TAP is connecting itself to more and more. The non-passenger growth has been mentioned. There are ideas to go beyond, not only MRO, also cargo, especially, of course, to Latin America, is a huge opportunity. And last but not least, of course, there is synergies which Till will explain in more detail in a minute, which basically starting from day one, will create value for our shareholders and also, of course, for the remaining shareholders of TAP. When it comes to government partnerships, obviously Lufthansa has been through a few learnings over the years, so we will apply the best of all what we have done in the past. Again, the Portuguese government was very open and professional in discussing with us how also the initial minority investment will create value for both.
I'd like to end with that because, as you know, a minority investment usually is not in our strategy as the optimum setup. Also here, we will come to that for sure. There is a path we designed with the Portuguese government, we discussed with the Portuguese government to come to 100% ownership or maybe with a few shares remaining for staff. But different than other hubs in the Lufthansa network, even the minority investment, due to the lack of overlap, does create value for both. You could not imagine Lufthansa owning only 50% in the Zurich hub or in the Vienna hub, because the overlap of the networks obviously are very high. With TAP having less overlap, which again increases its strategic importance for us, it also reduces the downsides of the period of a non-100% investment.
With that, I think we have one more slide prepared, which obviously is showing that page six overall fit, which we have now been able to create, and that slide alone shows what I just explained, that less overlap, more southwestern geographic position of TAP makes it a little bit different, both in value creation, but also in potential downside of a period of non-100% ownership than the other hubs we operate, where also, you know, in PMG we're moving towards 90% as of next year. With that, call it rationale, not wasting too much of your time. I'd like to hand over for Till for the details of the transaction. Then again, we both look forward to your questions.
Yeah. Thanks, Carsten, and good morning, everyone, from my side as well. I'm happy to talk you through the next few slides. The first one is, of course, tangible value creation is the headline here. Strategic fit alone of TAP would, of course, not be sufficient to us. This transaction also needs to meet our financial return requirements. This transaction, this partnership together with TAP clearly does. TAP alone has delivered, emerging from the pandemic, over the past few years, good results. 2025 alone, you can see an EBITDA margin of about 17% and an EBIT margin of 6%, and in the two years before, even slightly stronger.
That's on the one end side, and on the other end side, through our partnership, through the investment and the partnership, we see approximately up to EUR 450 million of identified net annual run rate synergies across TAP and Lufthansa Group. Again, these are net synergies. They do include also a view on integration cost and other items. Importantly, these synergies do not depend on majority ownership. Our investment case works under the carefully thought through and agreed governance structure. The value creation opportunities are concentrated in network optimization, commercial cooperation, procurement, and also MRO and cargo, and I'm sure we'll dive into that soon in our conversation. Of course, and that's a blueprint, we will jointly leverage the capabilities that we have as a group and there with also Lufthansa Group as a platform and the blueprint that does exist to work on these synergies.
There with, let me also say, with the experience we have acquired in previous partnerships and deals, we are confident on the synergy realization or let me put it differently, we view the execution risk as manageable. Let me add one point which is important, you can see that as well. A large part of the synergies is, of course, created on the TAP side. To have access to those synergies realized and also extract that value, we have agreed equally a dividend distribution with a step-up mechanism over time, reaching up to 75% in order to be reflective of the value being created as well in this partnership.
We expect the transaction to be EPS accretive in the first full year after closing and to generate a double-digit return on capital employed, and there with supporting also our path to achieving our midterm targets, which we have laid out at the capital markets day. The transaction will be fully funded from available cash. This transaction is to take place in the context of our strong commitment to investment-grade credit rating. Any future move towards a majority ownership, which the Portuguese government yesterday has commented on, would represent additional upside rather than being a prerequisite for value creation. Here, key message, attractive returns from day one with further upside over time. Let's move to the next slide. Strong partnership and governance. Although our initial ownership stake is below 50%, the governance framework gives Lufthansa Group meaningful influence over the strategic and operational development of TAP.
Here, in line with what you could hear the Portuguese government commenting on and explaining yesterday, we are fully aligned on this model. We will have a joint control through qualified majority provisions. This is really the spirit of working together. At executive committee level, we foresee basically three executives from our side and one that will be nominated by the Portuguese government. At the board of director level, a model where we have got four directors and the Portuguese government, five. The executive committee is in charge and has got the powers to deal with the day-to-day business, and therewith is fully in charge with running the company operationally. This governance structure has been designed to support the value creation plan that we've built our case on.
Of course, we also welcome the Portuguese government public statement regarding a potential route towards majority ownership by Lufthansa Group and yesterday's press conference by the Portuguese government underpins this. This provides greater visibility on the long-term ownership structure, and therefore, we see this transaction today as a first step into a broader strategic partnership. Moving on to the next slide, it's a summary of the key transaction terms. We will acquire an initial 44.9% stake in TAP for EUR 1,025,000,000. There's 5% employee shares reserved to employees. Depending upon the take-up of this employee share, this stake could reach up to 49.9%, including a ticking fee of 1.5% per year, up to EUR 1.2 billion in total. Just as a reminder, we work here under lock box concept on 2025 closing accounts, and furthermore, we expect signing to take place shortly.
Yesterday was obviously the announcement, signing expected shortly, and closing is expected to take place in the first half of 2028, of course, subject to customary conditions. Throughout the valuation, we have carefully thought through our offer and have been disciplined on the assumptions and the valuation. Here, including synergies, the valuation is in line with current trading multiples for European full service network carriers. Due to the meaningful synergies we expect to create, the return on the invested capital is very attractive. As I said, what's equally important is we have agreed that after a certain period where we would remain in minority, there is a dividend step up beyond the 44.9% or up to 49.9%, and this dividend step up can go up to 75%. Why was this important to us?
Because of course, this is reflective of the distribution of synergy realization between TAP and us. Let me equally add, the purchase price for the minority stake, obviously fully funded from available cash and no equity issuance required. Moving on to the right-hand side, which is the envisaged path to acquire potentially the remaining 50.1% of TAP. Here, the Portuguese government has commented on yesterday, and we have provided a non-binding proposal that defines the key parameters for this potential majority transaction, while the process remains separate and subject to further negotiations that are to be concluded. This proposal also envisages the Portuguese government becoming a Lufthansa Group shareholder with up to a stake of 5%. Should we ultimately achieve a majority ownership, we also see additional synergy potential.
In summary, this is an attractive minority investment in its own right, with additional upside from a future move to majority ownership. Moving on to the last slide, and then we'll open to questions. Key takeaways, what the deal is about. First, of course, South America footprint. TAP significantly strengthens our position in South America and the South Atlantic. Second, our multi-hub strategy. Lisbon is an attractive addition to our multi-hub strategy and strengthens our competitive position in attractive growth markets. Third, one group approach. TAP allows us to of course, fully leverage the full breadth of the Lufthansa Group across network management, commercial capabilities, but also including cargo and MRO. Fourthly, financial returns. The transaction delivers attractive financial returns supported by up to EUR 450 million of identified run rate synergies, EPS accretion, and a double-digit return on capital employed.
Fifth, governance and potential path to majority. We have secured a governance framework that supports value creation from day one, while also creating visibility on a potential future majority ownership structure. Therewith, this transaction combines strong industrial logic, also the logic of consolidation taking place in Europe, tangible value creation, and disciplined financing from our side. The investment stands on its own strategically and financially. Of course, the potential path towards majority ownership creates additional upside rather than being a prerequisite for value creation. Therefore, we believe that the partnership, the investment in TAP and the partnership with TAP, is one of the most attractive opportunities in European aviation for both companies and an excellent fit. With that, Carsten and I are ready to take your questions.
Thank you. We will now begin the question and answer session. Anyone who wishes to ask a question may press star one and one on their telephone. You will then hear an automated message advising your hand is raised. If you wish to remove yourself from the question queue, you may press star one and one again. Questioners on the phone are requested to disable the loudspeaker mode and eventually turn off the volume from the webcast while asking a question. In the interest of time, please limit yourself to one question. Anyone who has a question may press star 1 and 1 at this time. One moment for your first question. Your first question today comes from the line of Jarrod Castle from UBS. Please go ahead.
Good morning, everyone. I think it's congratulations, but I guess time will tell how successful the partnership becomes. On that, I just wanted to get a view, in terms of this EUR 450 million of synergies, how much of that comes from the Lufthansa platform versus TAP? I guess, what I'm trying to ask is, you've currently got a minority stake, so how would that EUR 450 million be split? Would, for instance, all the EUR 450 million be sitting in TAP, which is obviously unlikely, or would all the EUR 450 million be sitting in Lufthansa, which again, is unlikely once you've consolidated it. Just if you could just give a bit of color, I guess it's probably one for Till, but thanks.
Perfect, Jarrod. In terms of synergy potential, first of all, let me just put a bit of color to it. You can imagine that also through transactions before, we have got a pretty good blueprint and understanding of the size of the synergies across the different fields of action that we've got. We are reasonably confident on how we realize that. Indeed, the largest part of the synergies is accruing on TAP's side. This is very similar to what we've seen and what we've also told you in the ITA deal. Let me now give you a pointer. The step up in the dividends policy that we have agreed, which goes up to 75% in a minority stakeholding, is a good proxy for how the synergies would be split.
This is why I said it was an important point to agree with the Portuguese government, and we are grateful that they've done so in order to have a fair share of the synergies that are being created over time. Of course, in a setup where the path to majority is being realized, this element is then not relevant anymore.
Right. Noted. Thanks very much.
Thank you. We will now take the next question. The next question comes from the line of Jaime Rowbotham from Deutsche Bank. Please go ahead.
Morning, gents. I have lots of questions, but the limit seems to be one, so I will focus on the earnings accretion, Till. Just conscious that TAP has lost, I think, about EUR 87 million at the net profit level in H1. Looks like it might struggle to make a net profit this year. I guess you would attribute some of that to the crisis in the Middle East, et cetera. Just interested to hear your building blocks to get to earnings accretion. Linked to that, despite all the good things you are doing with ITA, the equity accounted JV contribution at the moment is actually a material headwind to Lufthansa's earnings, not helped by FX impacts from U.S. dollar denominated lease debt. Is there a risk that you run into similar issues with TAP? Thanks very much.
Yeah, Jaime, thanks for the questions. In terms of earnings accretion, I think here, obviously, you need to go back to our estimated time of closing ultimately. Of course, we have got a view on 2026 expectation, 2027 and 2028. We now believe, of course, things can play out differently, that closing could be taking place in 2028, so this is also a bit further out with referring to the current pressure that the airline industry is under in total due to elevated fuel prices and there with your reference to half one results from TAP. Obviously, they had been under pressure. Let me say like everyone else, to be honest, and therefore I do look through this, having in mind that the closing and there was also the effect on equity accounting is rather to take place in 18, 24 months' time or so.
So that's a view on the industry, let me put it like that. That's a view on also the EPS accretion within the first full year from closing. That's point one. Point two, you have rightfully pointed out that at equity accounting, and at ITA we are facing that, you always get it at net income. There is you've got FX movements if they occur and in ITA's case, they do occur due to the lease liability balance that is USD denominated. We know that in ITA's case, this will disappear when we consolidate. TAP also has got aircraft base. The aircraft base is also leased. Therefore, technically, this element exists too. But of course, there are also ways to address that.
Of course, as we move forward, again, for ITA, this is now, let me say, water under the bridge because we have triggered the option earlier this year. It's just a matter of time. Of course, for TAP, I would take a view on timing as to a potential phase two and then work on a solution to address and eliminate this potential volatility coming from FX.
Good stuff. Thanks, Till.
Thank you. The next question comes from the line of Alex Irving from Bernstein. Please go ahead.
Good morning, and congratulations on the deal. My question is on labor. During the process, the Portuguese Pilots Union came out against Lufthansa involvement and in favor of Air France KLM. How do you see the risk of labor tensions possibly frustrating the integration? Or if you do encounter problems, could we see other AOCs opened up in Portugal along the lines of City Airlines and Discover? Thank you.
Alex, it's Carsten. Well, actually, just in time for this conference, we received feedback from three unions from Lisbon. Overnight or early in the morning. One of them is SITAVA, so Sierra India Tango Alpha Victor Alpha, which is the ground union saying that they're very much open for the dialogue and are in favor of the deal. Also, the regional pilots of SPAC said the same thing. And the mainline pilots, which is the one you are referring to, they actually wrote me a letter yesterday also, or the day before yesterday even, also welcoming the cooperation. I think what happened there in the past was a little bit based on the labor conflict in Lufthansa, where the Lufthansa special pilot union was trying to put pressure on us and used the route through Portugal.
But all the meetings we have had, including the meetings with the unions themselves in Lisbon, showed us that they understand that we have a proven track record of developing the airlines we acquire, of growing them. I think it's also almost unfortunate that people looking at Germany now from outside of Germany, they understand that a successful global company based in Germany needs to become more international to pursue a global successful strategy due to the fact that labor cost, also infrastructure costs, are so high in Germany that part of the growth or a larger part of the growth will have to be outside. I think that strategy coming out of Frankfurt to internationalize was well understood by the unions, not by the way, only in TAP, also in the other non-German subsidiaries.
But also in Germany, by the way, even though Marc rightly said it's not for today, we'll give you more feedback on this in Q3. We had good talks both with the specialized pilot union and the specialized cabin crew union. I think the worst here is behind us and also that maybe I can give you on top of my comments here.
All right. Conclusion. Thank you.
Thank you. Your next question today comes from the line of Axel Stasse from Morgan Stanley. Please go ahead.
Yeah. Morning, everyone. Maybe a naive question on my side, but the Portuguese government basically has five seats out of nine. Lufthansa right now, minority control. You said you will operate the business jointly with the Portuguese government, but technically, how does this actually work? Which matters can Lufthansa, for example, independently, determine, decide regarding the fleet deployment, network planning, pricing, CapEx? Can you maybe elaborate a bit on this, as well, please? Thank you.
Look, the model is clearly a joint control model with a qualified majority. Here again, when you listen to yesterday's press announcement and press conference from the Portuguese government, we are fully aligned and going hand in hand here on this. The Portuguese government said clearly, and this is the way the executive committee is set up, that it can run and has got the powers to run the day-to-day business and do all of these things that you have described. Certain things, like in a customary setup, are then being moved up to the executive, to the board of directors, excuse me, to the board of directors, like huge and big investments or elements like a strategic plan or these elements, and they are discussed there.
The day-to-day business, the Portuguese government has made very clear, they want us to run this and work on the realization of TAP's plan and the synergy plan.
This I may say from my numerous visits to Lisbon, all our counterparts on various levels have looked very intensively to Rome and to ITA. I think there we proved that as of day one, we were able to create synergies also there in a minority investment initially. We took the best of our learnings from ITA and copied and pasted that also to the governance of TAP. I think that has been very convincing argument to many people across the table we walked or we went and discussed with in Lisbon. The only thing I hope will be faster than ITA is our friends in Brussels approving the transaction.
Also there, from our recent visits to Brussels, I think the leaders of Europe have understood that in a world which has changed quite a bit over the last years, to create strong global companies based in Europe is in the interest of Europe. So I would even be as brave as saying that we will also hopefully face an easier process in Brussels this time for two reasons. One, I think the attitude has somewhat changed in Brussels, as I just explained. Of course, second, the overlap of TAP with the Lufthansa Group is much less than it would have been with any other potential buyer. Including the one we just dropped out yesterday, but also our competitors who decided to leave the process earlier, the overlap would have been enormous.
I think also from an antitrust point of view, this is an easy transaction to approve.
Thank you very much.
Thank you. Your next question today comes from the line of Marc Zeck from Kepler Cheuvreux. Please go ahead.
Hey, good morning, and thank you for taking my question. I will take this question on, let's say, the level of clarifications. Maybe I can squeeze in one and a half or so. You said that EUR 450 million in synergies. Do I need to split the synergies, really according to the stakes? So it is kind of only 45% of those EUR 450 million that accrue to Lufthansa? Or is it basically EUR 450 million after those 45% stake? And should I also put that into the valuation including synergies, EBITDA calculation? So is it kind of an apples to apples comparison here? And maybe the half question is, you said it is an attractive return on investment. What is the actual number that you put on the return on investment on this one? Thank you.
Marc, okay, let me try to give you some more color. On the synergies, first of all, number up to 450 in the minority setup, when it gets to majority, even more. That is the first thing. You need to think of it, that the majority of those synergies is taking place at TAP level, the smaller part at our level. I have given you the idea that the dividend step up reaching about 75% is a good proxy for the split. That is step one. When you now go into step two, what accrues to us at an equity accounting is of course then 44.9% or up to 49.9% of everything that happens at TAP level plus 100% of the synergies at our level. That is the way to think about the 450, how they arrive.
Your second question, when you think about a synergized multiple, I will take the full net run rate synergies into account, and that obviously is a synergized multiple in line with basically our trading multiple broadly. Did you have a question on return on capital employed? Was it? I am just looking.
No.
If you have, please go.
Yeah, you said you calculate an attractive return on investment on this one, but you did not say what the number was.
No, clearly. But what I can tell you is obviously look at the first stake, the EUR 1.25 billion, 44.9%. That is our investment that we look at, what can we generate through that? When I then look at our return on capital employed, I would give you as a pointer, this is clearly accretive of where we are today and clearly putting us in, if not beyond, our target range that we have set out at the CMD last year, which is 15%-20% on return on capital employed. This was also one of the guiding principles, or let me say guard rails, in terms of assessing our willingness or ability to pay to make sure that at return on capital employed, we have got sufficient room to generate value.
Marc, really I can use your question as an opportunity to once again focus on something which I think has been partly misunderstood when we did the ITA deal. If you have a fixed price for the remaining shares, any value you create, it doesn't matter where you create it, because eventually it ends up with you. I think it's important for our teams around the world, once we have antitrust operational teams in sales around the world to consider TAP member of the family once the transaction is approved and not necessarily wait for the last share to be transferred because you know whatever you create in terms of value ends up with you one way or another.
That's what, by the way, ITA allowed us, of course, with the restriction of antitrust on the North Atlantic, which we're still waiting for, to treat them, even a minority environment, as a full member, and especially when it comes to hub optimization, revenue management, to already use that at full extent. That I think will happen here as well, regardless of the technical transaction going, of course, at least in two steps.
Thank you.
Thank you. Your next question today comes from the line of Antonio Duarte from Goodbody. Please go ahead.
Good morning, gentlemen, and congratulations on the deal. My question refers more to the timing of the synergies and how much of these synergies are relying on Lisbon as a hub, considering how highly constrained the airport is and its expansion plans for the future. Thank you.
Hi, Antonio. Obviously also from the ITA integration synergy realization starts taking place and gain pace from day one. But of course, until you are in full swing, it does take time. So I would say as a proxy with the current visibility that we've got and also good blueprint, I would say it takes about three years to get to about, let me say two-thirds of the synergy realization with the rest then to come. So let's say full swing four years, I would say roundabout that. But you get already. You build it up. That's it. In terms of well look, Lisbon as a hub, obviously, it's core to TAP, that's clear. The synergy buckets, of course, are stretching across a variety of different fields, from obviously everything around network, the schedule optimizations, sales and distribution.
Of course, cargo ancillary loyalty is an aspect that has got nothing to do with Lisbon as a hub as such, but of course also on the sourcing side. TAP also has got, when it comes to aircraft sourcing, of course due to the scale that they have had or that they have, and also the situation they were in, they're all opportunities that we can address.
I think, Antonio, if you look at chart five we provided in our deck, when you look at the network effects, this is something, if I may say, and I've been around for all the other transactions as well in one way or another, I've never seen a chart like this of network synergies being created through a transaction. Therefore, think about Lufthansa now today filling our airplanes to Brazil partly with traffic from France or even from Spain or Portugal because we have to offer competitive prices to reroute these people via Frankfurt or Zurich or Munich. In the future, of course, to push them through Lisbon, it's a much more value-creating element of our network strategy. The other way around, of course, works as well with the Portuguese market then being more filling for our hubs to go towards Asia and so on.
That chart, I think, shows numbers which are not shown very often in an acquisition of an airline by another airline group.
Adding to what Carsten Spohr has said also, when you just compare TAP's position from their end, and our end, obviously you see where also potential is in terms of feeder traffic.
20% market share.
Thank you.
is now a lot, and I mentioned that in my opening remarks. We are now on par with our friends in Madrid and London with IAG. We are even slightly ahead of Air France, but also there with 17% where there is 20 of IAG and Lufthansa Group. We are all three now in a very similar market share situation, which of course will increase competition, which is also going to be an important argument for Brussels, I think.
Thank you. We have a follow-up question, and the follow-up question comes from Jaime Rowbotham from Deutsche Bank. Please go ahead.
Oh, thanks. It is just following up on this subject of remedies and whether you think some of your peers might pick up any short or long-haul slots as a function of the deal.
No. Well, again, I said it before, we have learned over the years must be left to the authorities in Brussels, but if you look at this acquisition compared to others, and also there, chart five I think is helpful. It shows that the overlap and therefore the logic for remedies is very different than other acquisitions, including ones we have done. So I think we will prepare those discussions professionally. We obviously learned a lot over the years, especially learning from the ITA process. Portuguese government will be very supportive and helpful. For them, this is key. Let us not forget they are a country on the edge of Europe. For them, connectivity is absolutely essential, and so we will be arguing shoulder on shoulder, I think, with the Portuguese government to also accelerate the process hopefully. I think the ITA is an example.
Even I talked to people in Brussels, nobody is proud about the time it took to get the ITA deal approved, even though in the end we had an approval. I think everybody is motivated. By the way, also the German government, which looks at this as, if I may say, a leading nation in Europe, what does Europe need to make sure that the European economy is not falling further behind towards the U.S. or even Asia? There's a very much of an aligned process here also on the political level.
Very good. Thanks, Carsten.
Thank you. Ladies and gentlemen, that was the last question for today. I would now like to turn the conference back over to Marc- Dominik Nettesheim for any closing remarks.
Yeah. Thanks, Sharon. Thanks for all of your questions and the lovely discussion. Thanks to you, Carsten and Till, for making yourself available. We're looking forward to continuing the dialogue in November and up until then, have a good time. Talk to you all soon. Bye-bye.
Thank you. Ladies and gentlemen, the conference is now over. Thank you for participating in the conference. You may now disconnect your lines. Goodbye.