Avianca Among Favorite Suitors Of TAP Portugal -Report

SAO PAULO (Dow Jones) -- AviancaTaca Holding (PFAVTBA.BO), the South American airline controlled by German Efromovich, is among the favorite candidates for a likely takeover of Portuguese airline TAP, Exame magazine reported Thursday.

TAP is reluctant to sell to Spain's Iberia, which has already expressed interest in the company, Exame said, citing people it didn't name familiar with talks.

TAP prefers a company with Brazilian links because many of its flights are to or from Brazil, Exame said. Avianca is preferred over rivals such as TAM (TAMM4.BR)-- which is merging with Chile's LAN (LFL)-- because TAM operates many of the same routes as TAP, Exame said. Gol Linhas Aereas Inteligentes (GOLL4.BR) was also approached, but it is facing financial difficulties and wasn't interested, Exame said.

Avianca is also preferred because it is part of Star Alliance, of which TAP is already a member, Exame said.

Azul Linhas Aereas Brasileiras, which has about 10% of the Brazilian market, was also approached, but isn't currently interested in acquisitions, Azul founder David Neeleman told reporters Wednesday.

Avianca declined to comment. TAP didn't answer calls placed to their Lisbon or U.S. offices.

The Portuguese government, which hasn't officially started sale proceedings, needs to sell TAP by the end of the year as part of its international bailout and is in the process of selecting financial advisers for the process.

-By Paulo Winterstein, Dow Jones Newswires; 55-11-3544-7073; [e-mail]