TAP slashes €1.3Bn operational costs

 In Aviation, Companies, News

Portugal’s national airline carrier TAP has to make €1.3Bn savings in operational costs as part of its restructuring plan.

TAP is renegotiating orders and payments with suppliers and lessors, while making changes to its fleet and flight routes in order to adapt to the crisis in the airline sector.
All told, the company intends to save €1.3Bn by 2025, according to ECO Online, citing the Arline’s interim CEO Ramiro Sequeira who attended a parliamentary hearing on Tuesday.
Last year, TAP lost over €900 million because of the Covid-19 crisis.
“State economic aid for airline companies is taking place all over the world, and it is within this context that we need to study the €1.2Bn state aid given to TAP,” he said, adding that it was important to emphasise that TAP had not been waiting for this aid in order to implement its restructuring programme, since from the word go it had taken various measures to reduce costs and protect its cashflow.
Sequeira told the hearing that renegotiations were underway with over 1,000 suppliers, measures were being adopted that include cutting routes, deferring payments of operating leases with lessors, a renegotiation with Airbus to postpone the delivery of 15 aircraft from 2020 to 2022 and the sale of another eight aircraft. After changes to the fleet, TAP will still have 88 passenger aircraft and three cargo planes.

Salary cuts

TAP management will suffer salary cuts of 30% from this month (February 2021) and the remaining 8,500 staff (it had shed 1,200 staff in 2020 and will make redundant a further 700 staff over the next year or two) will take a 25% from in March.
However, TAP’s restructuring plan will only receive the green light go-ahead from Brussels in the second quarter of this year.
This expectation was announced by TAP chairman Miguel Frasquilho, at the same parliamentary commission, who said that he did not expect a negative result.
After having received an initial injection of €1.2Bn in 2020, TAP can only receive more public funds after receiving the OK from Brussels.
“We’ve been talking to the European Commission for several weeks but the Portuguese government is heading the talks and we are not always present at all meetings, but there have been several,” said Frasquilho.
“What I can say is that the (restructuring) plan is seen as credible, carefully thought out and resilient,” he told parliament’s Economy, Innovation, Public Works and Housing Commission.