TAP needs emergency cash to avoid bankruptcy
The Government has appointed the ex-president of Águas de Portugal to negotiate a State financial rescue package for airline TAP.
If the airline doesn’t get several hundred thousand euros by 20 May, it runs a serious risk of defaulting on its obligations and being in a position of technical bankruptcy.
João Nuno Mendes is the man chosen by the Government to negotiate the conditions for TAP’s re-capitalisation. He will also be supported by the offices of infrastructure minister Pedro Nuno Santos and Finance Minister Mário Centeno.
The Government is also using the consultants Deloitte and VdA in addition to Parpública, the State company which has a 50% share in the airline.
At present, the Government is considering the first tranche of emergency cash to keep the airline going and which would be paid in the coming weeks.
Failure to receive this initial cash injection means the company would default on its obligations, but the final total sum of money is expected to be more than €1Bn.
The crisis from Covid-19 could not have hit the airline at a worse time as it closed 2019 with a €105.6 million debt despite healthy flight and passenger numbers.
On Friday, the Government met representatives from TAP’s Executive Commission headed by Antonoaldo Neves and chose the ex-president of the water company Águas de Portugal to coordinate the negotiations for State support for TAP.
The private owners of the airline, David Neeleman and Humberto Pedrosa of the consortium Atlantic Gateway which has 45% share in the airline have urged the Government to provide an injection of public money through a series of loans while the Government has been looking at all possible scenarios including nationalisation.
João Nuno Mendes has to come up with a package of measures to save the national airline company, but TAP will need an emergency cash injection by 20 May in order not to default.
The Government has made it clear that if taxpayers money is used to rescue the airline, then it must have a greater say in how the airline is run, including the appointment of a government manager to sit on the Executive Commission.
At the end of April TAP’s Board of Directors took the decision to extend the lay-off period for staff until 31 May.
And information on TAP flights to London and Paris which were supposed to start from 6 May and to Brazil from 18 May posted online last week has been taken down with the airline stating that flights will only recommence with sufficient demand.
Low-cost airline Ryanair announced this week that it would operate 40% of its regular flights from 1 July subject to the lifting of restrictions imposed by the Covid-19 pandemic and the application of public health measures at airports.
On 8 May it announced that it would fly daily between Porto and London Stansted from 22 May.