North in rupture over TAP funding

 In Business, News, Tourism

Porto’s commercial association ACP is to present a financial viability plan for Portugal’s airline TAP in the “next few days”.

The move comes over a disagreement with the Government that the airline should scale down its operations and concentrate them from just one hub – Lisbon.
“If TAP says that it is more viable to work with just the Lisbon hub, then we’re going to dispute this,” says the President of the association, Nuno Botelho, who believes that the injection of State money into TAP should be distributed across other regions so that they can themselves “attract routes and wealth.”
Last week the ACP slapped a lawsuit against the State to block an estimated €1.2Bn loan to TAP to recapitalise the airline, a sum which had been factored into a supplement to the State Budget for 2020.
According to the newspaper Expresso, the lawsuit was handed to the Supreme Administrative Court on Friday in which the ACP criticises the option that gives priority to Lisbon international airport to the detriment of other regional airports in Portugal like Porto’s Sá Carneiro airport.
“There cannot be an injection of state monies while TAP will not serve the national interest as a whole rather than just the Lisbon region,” says Nuno Botelho.
“Our plan will show that with the State money that the Government plans to inject into TAP, it can at the same time be distributed in a fairer way to other regions of the country in order to attract routes and wealth without the company becoming financially unviable,” says Botelho in an interview with the online news source ECO.
“TAP has always had some accounts that we can’t make out regarding routes departing from Porto, Faro, Madeira and the Azores which they say aren’t profitable. So, we’re going to discuss how to make them profitable,” he adds.
“If they don’t want what for us can be profitable routes, and the second option is to concentrate the entire operation in Lisbon, then please let us work from our airports and give the regions a proportion of the monies so that we can operate and attract these flights ourselves,” added Botelho.
Legal experts have explained to the news agency Lusa that the Government now has 10 days to present a reasonable solution to counter the ‘block’ in which it must invoke public interest to proceed with the capital injection of the €1.2Bn.
The Supreme Court will rule first on the lawsuit blocking the cash transfer and later on the merits of the lawsuit itself.
The legal grounds for the precautionary measure “rest on three essential arguments,” according to the statement.
“The disregard for the principle of territorial balance, since TAP’s flight plan concentrates 96 percent of international flights at Lisbon airport, marginalising Porto airport and ignoring the others,” and “the defence of the principle of transparency, since, if TAP is a private company, it must live on its own resources,” are two of the arguments.
The third concerns the “promotion of the principle of rationality”.
“The promotion of the principle of rationality, because if TAP becomes a public company, or the State places large funds in it — which are known to be impossible to pay back because TAP, which has negative equity of €600 million, simply does not have the capacity to do so — saddling tax payers for generations to come, so this national contribution must be matched by an airline service of a national dimension,” the trade association argues.
The President of the Commercial Association of Porto, Nuno Botelho who is “the first signatory of the legal action” says that the goal of the lawsuit “is clear”.
“There can be no cash injection from the State until it can be ensured that TAP serves the national interest as a whole and not just the Lisbon region. We cannot allow TAP to be a Novo Banco, it cannot be another PT, BES or BPN,” argues Nuno Botelho, in a statement.