Essential Business

TAP without Lisbon hub would spell the end of the airline

 In Aviation, News, Tourism

An umbrella group of several unions which represent staff working for the Portuguese national carrier TAP argues that decentralising operations away from its Lisbon hub would spell the end of the airline.

“Any Restructuring Plan that puts this medium haul-long haul-medium haul Lisbon hub at risk would mean the end of the TAP group and all the consequences that this would entail both directly and indirectly,” say the unions.
TAP, they add, is the largest national exporter of non-transactional goods (cargo), one of the largest employers in Portugal, one of the largest net contributors in taxes (not jut in terms of employment (IRS/TSU), but also from its own business activities (IRS/IVA), and one of the main drivers for travel and tourism.
TAP is currently undergoing a major restructuring but political and business pressure groups in Porto and the north of Portugal are arguing for a more decentralisation of the airline towards greater regional representation to reflect the growing importance of the North in terms of the Portuguese economy, tourism and manufacturing industries.
In particular, the Porto Chamber of Commerce and Industry wants more emphasis placed on the airport at Sá Carneiro, the second most important airport in Portugal, which has grown in terms of passenger numbers and flights over the past five years.
The group met on Friday with the TAP board and representatives of the Boston Consulting Group which is overseeing the restructuring plan demanded by the European Commission because of a state loan to the airline which has struggled to remain profitable for years and was badly affected by the Covid-19 pandemic.
The five unions defending the hub and spoke system at Lisbon airport, which essentially means intercontinental routes between Lisbon and Brazil and the United States and parts of Africa like Angola and Mozambique, are: the Union of Economists (SE), the Union of Engineers (SERS), the Union of Accountants (SICONTI), the Union of Metalworking Industries and Others (SIMA), the National Union of Civil Aviation Workers (SINTAC), the Union of Commercial Aviation Staff (SQAC) and the Union of Airport Handling (STHA).
The unions are also pointing to the success of TAP’s ‘Stopover’ programme which permits a free three-day stopover in Lisbon as the hub and which had boosted tourism to the city in 2018 and 2019.
The unions also argue that even though TAP has upped its number of routes and aircraft by more than double since 2000, the group has done so with virtually the same number of staff, thereby cutting real costs.
Between 2000 and 2019, they say that the number of ground crew has actually fallen by 20% while at the same time the group grew almost 2.5 times in terms of fleet/routes.
On the 17 July, the Portuguese Council of Ministers approved a loan to TAP of up to €1.2Bn without which the airline would go under. If the restructuring plan goes ahead smoothly,
But the EU Commission only allowed the loan on the condition that the airline undergoes a massive restructuring operation, centralising its operations in order to cut costs with the focus on the more profitable parts of the airline, in particular its intercontinental hub and spoke operation.
In return for the restructuring of the airline, TAP will avoid having to repay the Portuguese government backed loan.
The Portuguese State is currently negotiating the purchase of TAP SGPS Atlantic Gateway SGPS, Lda for €55 million from Brazilian airline mogul David Neeleman which would increase the state’s share in the airline to 72.5%.
TAP was partly privatised in 2015. David Neeleman is selling his 45% stake, while the state which has 50%, (TAP employees hold the remaining 5%) will own the controlling share.
TAP ended 2019 with its best ever cash position despite a net annual loss of €106 million, but it has incurred heavy losses in recent months because of the pandemic.


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