Was TAP CEO Christine Ourmières-Widener scapegoated over golden handshake scandal?

 In Companies, News, TAP

The CEO of Portugal’s airline TAP has been fired for ‘fair cause’ over a €500,000 ‘Golden Handshake’ paid out to an ex-director who resigned after serving less than one year in the executive post.

But the removal of the French CEO who was employed in 2021 to oversee the restructuring of the troubled airline, and did so successfully, is raising eyebrows that she may have been sacrificed to allow the Government and its Finance Minister, Fernando Medina to save face.

However, yesterday Prime Minister António Costa repeated a mantra given repeatedly in recent days that his minister, whose ministry shared joint responsibility for TAP with the Ministry of Infrastructure, knew nothing about the process of the case involving ex-director Alexandra Reis, and which has resulted in the heads rolling of three figures in the government and two directors of TAP.

The announcement was made that Christine Ourmières-Widener – once lambasted by the press as the Marie Antoinette of the airline – and board chairman Manuel Beja had been sacked by the current Minister of Infrastructure João Galamba and Finance Minister Fernando Medina, the latter who said: “This episode has shaken the confidence of the Portuguese in TAP and it is essential, above all, to recover the bond of trust between the company and the country.”

And because the two TAP executives were sacked, it means that they will not receive any compensation. Christine Ourmières-Widener was expected to receive a bonus of somewhere between €1.5 million and €3 million if she had successfully completed the restructuring plan at the airline, making it financially solvent in preparation for its sale at some time this year.

Last year the airline posted an impressive set of financial results including a third quarter net profit of €11 million compared to a loss of €134.5 a year earlier, while its ticket sales and other operating profits were a healthy €1.1Bn compared to just €444 million.

Christine Ourmières-Widener has overseen a difficult restructuring plan that had been approved by the European Commission in December 2021.

The plan to get TAP into a financially sound condition – something no previous TAP administration had managed in 20 years – was approved in exchange for the Commission agreeing to the Government pumping €3.2Bn into the airline to keep it in the air after two disastrous years because of the Covid-19 pandemic.

The sacked TAP CEO, who has not made any public statement since the dismissal was announced, is said to be meeting with a team of lawyers examining the possibility of suing the Portuguese General Inspectorate of Finances who released the findings of an investigation, which found that the Golden Handshake awarded to Alexandra Reis on her resignation, (said to be over “management differences” with the CEO) was null, and that the ex-director had to return €450,000 of the €500,000 compensation package the award of which “lacked grounds in law”.

The IGF found that the resignation had been for “mere convenience” and that the process did not meet legal requirements, and that the act actually equated to a dismissal which had not been undertaken by the competent company entity, and which should have been the shareholder (the Portuguese State) and decided at a General Assembly meeting.

It also stated that compensation was not due since the ex-director’s employment period did not meet the 12 months required in the job.

Fernando Medina said that TAP would be privatised soon. Both the Lufthansa Group and Air France – KLM Group were reportedly interested in acquiring TAP. Most recently, Lufthansa CEO Carsten Spohr said the airline was focusing its efforts on the acquisition of ITA Airways but was keeping its options open. Lufthansa reiterated its interest again this month.

Alexandra Reis joined TAP’s board in 2017 and three years later in 2020 was appointed a director on a gross salary of €245,000 p.a. , but her time on the board was short, and she left the following year (2021). During her time with TAP, Alexandra Reis was one of the figures in charge of the airline’s restructuring, which led the amicable and sometimes not so amicable redundancy of 3,000 staff. When Reis left her role, she had two years left on her contract and was compensated with the Golden Handshake.

As to Christine Ourmières-Widener, the Prime Minister stressed that the airline’s restructuring had been fulfilled “with great success” and with the expectation of “good results”.

António Costa also exonerated TAP’s administration. “None of this takes away recognition that the results of the execution of the restructuring plan have been positive and this is to the credit of the administration and the CEO of TAP”.

The Government has appointed Luís Rodrigues, who had run TAP between 2009 and 2014 under the then Chairman Fernando Pinto, will occupy the roles undertaken by Christine Ourmières-Widener and Manuel Beja from next month. He had been running SATA – Azores Airline. The Regional Government of the Azores had not even been consulted.