Portugal’s government and private shareholders in ailing flagship airline TAP are close to a deal that would give the state a controlling stake while avoiding a full-scale nationalisation, two sources with knowledge of the talks said.

The state currently holds a 50% stake in TAP.

One of the sources said the negotiations had accelerated in the early hours of Thursday, leading to a draft agreement under which Brazilian-American aviation entrepreneur David Neeleman would cease being a TAP shareholder, while Portuguese entrepreneur Humberto Pedrosa would stay on.

Neeleman and Pedrosa are the two partners in the Atlantic Gateway consortium that has a 45% stake in the airline and has until now resisted government plans to grant TAP a 1.2 billion euro ($1.35 billion) rescue loan that would entail more government control.

Like a string of other airlines, TAP asked for help in April after a collapse demand for travel in the coronavirus pandemic forced it to suspend almost all of its nearly 2,500 weekly flights. The European Commission approved the rescue loan earlier this month.

A second source said the agreement was almost sealed, only missing a few details, namely regarding the exact increase in the state’s ownership and the final stake for Pedrosa.

The Infrastructure Ministry declined to comment.

To reach an agreement, the government managed to convince Brazilian airline Azul, founded and part-owned by Neeleman, to give up its right to convert a 90 million euro loan granted in 2016 into shares of TAP, one of the sources said.

The government is expected to announce its final decision on TAP’s future on Thursday afternoon after a cabinet meeting. Prime Minister Antonio Costa said on Wednesday a “stable solution” for TAP would be announced very soon.

TAP reported a first-quarter net loss of 395 million euros.

($1 = 0.8864 euros) (Reporting by Sergio Goncalves, writing by Catarina Demony, editing by Andrei Khalip and Mark Potter)

This article was written by Sergio Goncalves from Reuters and was legally licensed through the NewsCred publisher network. Please direct all licensing questions to legal@newscred.com.

Photo Credit: A Tap Air Portugal Airbus A321 in Hamburg. The airline is closing in on a deal to give the government a controlling interest. Kevin Hackert / Flickr.com