Neeleman explains TAP leasing deal

Brazilian-American airline mogul David Neeleman, who is at the centre of a controversy over the way he financed a leasing deal for 53 Airbus aircraft when he was the main shareholder of TAP, has hit back at claims that he financially damaged the company.

In an interview with Expresso, Neeleman has argued that when he became the main shareholder through the consortium Atlantic Gateway, he “found a company that was bankrupt, completely uncapitalised, with no cash-flow, and that couldn’t pay its salaries”.
David Neeleman was invited by the PSD/CDS-PP coalition government headed by Pedro Passos Coelho to compete in the privatisation of TAP in 2015.
When he came on board, he also found an airline with one of the oldest fleets of aircraft in Europe.
Neeleman argues that he “got down to work” with Gateway, created a Strategic Plan for TAP whose main pillar rested on renewing its fleet, which while not being a condition for him to buy a €1Bn stake in the airline, was a differentiating factor and absolutely critical for the future of the company”.
Neeleman argues that the lease purchase of the 53 Airbus NEO aircraft enabled the company to make major energy efficiency gains and expand into new markets.
It was why he decided to cancel the previous order for 12 Airbus A350s and explained that “TAP couldn’t financially afford that purchase since it was totally uncapitalised: it didn’t have enough money to pay the employees, let alone pay instalments on new aircraft,” he said.
On the other hand, TAP could not assign, transfer or monetise its contractual position to third parties without the agreement of Airbus. Therefore, Airbus confirmed in writing — in a letter that the public entity responsible for managing Portugal’s public companies Parpública (the State held a 50% share in TAP) was aware of — “that it could not accept the transfer”, and added that “in the case of default, a situation that was highly likely” given the perilous state of TAP’s finances, it would have to “terminate the contract and keep the downpayment paid by TAP”.
Neeleman also explained the payment of salaries with Airbus funds: “The US$226 million in supplementary payments were used exclusively by TAP to pay salaries and meet cashflow needs. In truth, those funds, together with other supplementary payments, and the loan from Azul (David Neeleman’s airline in Brazil) “saved the company from immediate bankruptcy”.
David Neeleman also defended his period at the ‘yoke’ of TAP by saying: “As a result of our executive management of TAP for five years, until Covid-19, the company did not require one euro of Portuguese State money, while we substantially reduced the State’s exposure to TAPs pre-privatisation debt (…) Our team turned a company on the brink of collapse into a company with a new lease of life from a financial point of view, in terms of its human resources, and with a modern fleet prepared for the future”.

Photo: Lusa – Tiago Petinga