Portugal's government said it has sealed a final deal with private shareholders of ailing flag carrier TAP to take a controlling stake in the airline while avoiding nationalisation. 

"TAP is too important for the country for us to accept the risk of letting such a company fall," Infrastructure Minister Pedro Nuno Santos told a news conference. "Fortunately we avoided TAP's nationalisation." 

According to the government, the state will increase its stake in TAP to 72.5% from the current 50%, with Portuguese entrepreneur Humberto Pedrosa remaining a shareholder, holding 22.5% of the airline. 

TAP employees will keep the remaining 5% of the airline. 

Pedrosa and Brazilian-American aviation businessman David Neeleman previously held 45% of the airline through private consortium Atlantic Gateway. Neeleman will no longer be a shareholder, according to the government. 

Nuno Santos also said the airline's current chief executive Antonoaldo Neves will soon be replaced. 

Atlantic Gateway has until now resisted government plans to grant TAP, which suffered heavy losses in the coronavirus crisis, a €1.2 billion rescue loan that would entail more government control. 

Like other airlines, TAP asked for help in April after a collapse in demand for travel due to 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. 

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 €90m loan granted in 2016 into shares of TAP, a source said. 

TAP reported a first-quarter net loss of €395m.