TAP – Neeleman calls for State to guarantee loans

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The airline mogul David Neeleman has offered to collaborate with the Portuguese government on a rescue solution for national carrier TAP.

The entrepreneur who owns a considerable stake in the airline says it needs a state guarantee in addition to competitive financing plans.
Talking to the news agency Lusa, David Neeleman who with entrepreneur Humberto Pedrosa owns the consortium Atlantic Gateway – holding 45% of TAP capital — said that Portugal was “dealing well with Covid-19 thanks to the health and economic measures defined by the Government and followed by both companies and the population”.
“I was pleased to see that the Portuguese Government not only dealt with the health aspect of the crisis but launched early on incentives for the Portuguese economy where the state guarantee was one of the main measures to support SMEs, as well as the simplified lay-off regime which TAP has signed up for,” said Neeleman.
He said that the impact on the airlines from Covid-19 had been “brutal” and that TAP had not escaped these effects. The airline has 95% of its aircraft grounded and 90% of its staff at home. “Even the largest and most robust airline companies are facing massive challenges” he said.
Nevertheless, TAP had succeeded in building a strong cash flow in 2019, the best in its history, having closed the year with €435 million in hand which “would have meant TAP could face 2020 at ease” he added.
However, within the context of restrictions imposed by the Coronavirus pandemic, David Neeleman says, “TAP immediately contacted European and international investors to get additional financial support” to deal with the negative effects of the crisis and “overall investors have shown an interest in financing TAP and came up with fairly attractive and competitive financing proposals, providing they came with a guarantee from the Portuguese State.”
It comes at a time when Richard Branson’s Virgin Atlantic airline announced today that it would collapse unless it received a state bailout from the UK government.
Portugal’s Prime Minister António Costa has not ruled out renationalising TAP. It currently already holds the Golden Share in the carrier.
David Neeleman said, “Out of the various financial support mechanisms available from the State, the issue of a debt guarantee is the model which has been adopted by our competitors because it has a series of advantages, among them the roll out time which right now is vital for TAP”.
“It is important to remember that since TAP’s privatisation, the State did not have to put in a single euro into TAP and that what we need right now, despite the huge difficulties, is a state financing guarantee and not a direct loan from the State” he said.