THE BATTLE FOR EUROPE Lufthansa just won TAP Air Portugal, and I think it’s the worst-run of Europe’s three big airline groups. Portugal picked its all-cash offer over Air France-KLM’s, less than two years after Lufthansa bought into Rome’s ITA. Everyone wanted TAP because Lisbon is Europe's door to Brazil. TAP flies to 15 Brazilian cities, and most of them have no other nonstop to Europe. IAG walked away in April because Portugal is only selling 44.9%. Lufthansa has collected more flag carriers than anyone: Swiss, Austrian, Brussels, ITA, and now TAP. IAG has BA, Iberia, Aer Lingus, and Vueling. Air France-KLM is still Air France and KLM, plus a stake in SAS. Lufthansa is the biggest group, but IAG is by far the most profitable. It made €5 billion of operating profit last year, about 2.5 times what Lufthansa or Air France-KLM made. Lufthansa's problem is Lufthansa. Swiss made a 9.3% margin, and Lufthansa's own airline made 0.9%. The fleet is a mess: 13 widebody types, 747-400s and A340s still flying, and new 787s that flew for six months with only 4 of 28 business seats sellable. I think it has underinvested in Austrian and Brussels too, and I hope it doesn't do the same to ITA. IAG is ruthless, and it pays. BA cut up to 12,000 jobs in 2020 and only started its £7 billion plan to fix the product in 2024. Iberia is the star, with a 16% margin and some of Europe's most punctual flights. Air France-KLM is the group I'd rather fly. Ben Smith took over in 2018 in the middle of strikes and rebuilt the product, with new La Première suites, new business seats, and free Starlink Wi-Fi. The weak spot is money: investors value the group at about $3 billion, against $26 billion for IAG. I think Lufthansa wins these auctions because it can pay cash, and I don't think it's because it runs airlines well. Now it has to fix TAP while it's still fixing Lufthansa.