(Bloomberg) -- Portugal’s state-owned airline TAP SA said a new investor would put it on a more solid footing as it pushes ahead with a restructuring program amid higher fuel costs and increasing geopolitical uncertainty.

“It’s a very difficult market,” Chief Executive Officer Christine Ourmieres-Widener said in an interview. “Fuel costs are increasing. We could have wars, we could have pandemics, so being part of a larger group of course gives more foundation to any airline. But it should be the right partner.”

While the final decision will rest with TAP’s government owner, which recently funded a 2.55 billion-euro ($2.7 billion) bailout and is on the lookout for a new stakeholder, any backer must be committed to “the long term growth, and DNA, and sustainability of the company,” she said at its headquarters in Lisbon.

TAP has gone through a torrid few years even by the standards of an aviation sector rocked by the coronavirus crisis. While most other European flag carriers belong to three groups based in the region, the Portuguese firm was sold to the Atlantic Gateway consortium led by airline entrepreneur David Neeleman. After the deal soured the government regained control, lifting its stake in holding company TAP SGPS during the pandemic and becoming sole owner in December.

The ownership change was accompanied by the bailout, approved by the European Union only after Portugal agreed to slash TAP’s costs through job losses and swinging cuts to the fleet.

Ourmieres-Widener, the first female CEO in TAP’s 77-year history, said the topic of investment is “very sensitive” and “should be dealt with by the shareholder.” Portugal’s infrastructure minister said in March that several potential partners had shown an interest, while declining to provide details.

Alliance Benefits

Deutsche Lufthansa AG, which owns former national carriers in Austria, Belgium and Switzerland, as well as Germany, has long been seen as a likely investor. IAG SA, comprising British, Irish and Spanish airlines, is regarded as less of an option since its Madrid-based Iberia arm competes with TAP on trans-Atlantic routes. Europe’s third group, Air France-KLM, unites French and Dutch airlines.

TAP is meanwhile relying on code-share deals and its membership of the Lufthansa-led Star Alliance to bolster its business after posting a net loss of 1.6 billion euros last year, hurt by measures including the closure of a maintenance business in Brazil.

Ourmieres-Widener, 57, a French national who was appointed CEO in 2021 after previously working at Air France and running regional carriers CiyJet and Flybe, said the restructuring remains on track despite an anticipated 300 million-euro jump in the annual fuel bill.

Even as costs rise the rebound in travel demand following the lifting of coronavirus curbs is continuing to spur revenue, which should be “significantly better” than last year. Passenger numbers are recovering faster than expected and may reach pre-pandemic levels next year from around 90% now, she said.

Brazil Links

Like other European airlines, TAP has seen a trend toward passengers spending more on journeys. “There is a push on premium travel because people saved some money,” Ourmieres-Widener said. “People want to go somewhere. They want their freedom back.”

Despite the limitations imposed by the rescue plan, TAP still has room to grow, the CEO said. It’s still the biggest European operator to Brazil, serving 11 destinations, maintains a strong presence in Africa and operates a number of flights to North America, she said.

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