TAP posts loss of €57.4M

TAP posted a loss of €57 million in Q1 after last year’s annual results saw profits of €65.6 million.

In Q1 the airline, currently the subject of a parliamentary inquiry over its management, suffered a loss of €57 million. However it was a lower loss than TAP had suffered in Q1 of 2022 and its overall profits from ticket sales grew by 70.4% like for like.
The results were posted as the Portuguese Government and the new CEO of TAP, Luís Rodrigues confirmed this week that there was a restructuring under way at the company’s executive commission.
On Wednesday, TAP’s COO Ramiro Sequeira told a parliamentary inquiry that the take-off slots at Lisbon’s Humberto Delgado Airport were the “greatest asset the airline” had which could be under threat if the national carrier were acquired by a company like the IAG Group, the owner of Iberia and British Airways, which could focus all hub activities at Madrid airport. Meanwhile Air France reiterated its interest in buying TAP if the price was right. TAP is currently valued at just around €900 million, but it is unclear what, if any percentage of the company the government might what to retain.
The Chief Operations officer at TAP, who used to work for the IAG Group before joining the airline, did not offer his personal opinion on the possible impact if IAG purchased TAP – which could put at risk Lisbon airport’s position as a hub and gateway to Latin America and Africa – in the reprivatisation, but chose to share a different vision to the one that has dominated public opinion.
As to the results for Q1, in a note to the Portuguese stock market commission CMVM on Wednesday, the company states: “Despite a negative net result of €57.4 million, this represented a significant improvement when compared to the values in Q1, 2022 and Q1 2019 which posted €-121.6 million and €-106.6 million respectively”.
TAP highlights “strong activity growth in Q1 with the number of passengers and capacity exceeding the pre-crisis levels on the first quarter of 2019 to create revenues of €835.9 million, supported by “better levels of fleet capacity use”.
The number of passengers carried by TAP in Q1 increased 66.9% on the same period in 2022 and exceeded levels seen in Q1 of 2019, while it operated 34.2% more flights than in the 1st quarter of 2022 or 92% in the same period of 2019.
With a recurrent EBITDA of €120 million in Q1 the group emphasises its “solid” financial performance, despite an increase in recurring operational costs.
The new CEO of TAP, Luís Rodrigues also highlights that the first quarter displayed a continued growth in demand allowing TAP to transport, for the first time in a post-pandemic quarter, more passengers than in 2019.

Neeleman shouldn’t have got the €55 million as TAP was bankrupt

As the parliamentary inquiry continued on Thursday, Diogo Lacerda Machado (Pictured), a former non-executive director of TAP reacted to the payment of €55 million made by the State to former shareholder David Neeleman in 2022 to abdicate his position as a main shareholder in the airline.

The lawyer said that under article 437º of the Civil Code, with the Covid-19 pandemic “all agreements and contracts made up until then had lost their intrinsic validity”.
The article in question states, “If the circumstances under which the parties that made the decision to contract suffered an abnormal change, the prejudiced party(ies) have the right to cancel the contract, or change it according to considerations of equity providing the demand of the obligations accepted seriously affect principles of good faith and are not covered by the risks laid down in the contract”.
In his opinion the shareholders’ agreement signed by the State with Atlantic Gateway at the time of repurchasing the company’s capital in 2020, which returned the 50% of TAP held by David Neeleman and Humberto Pedroso (Atlantic Gateway) to Parpública, the umbrella company that holds Portugal’s public sector companies, was void.
“The shareholders’ agreement was no longer in force given such a radical change in circumstances”, said Lacerda Machado, emphasising that the pandemic resulted in all of TAP’s capital being lost. This is why Machado could not understand why the €55 million that the Government had paid to David Neeleman in October 2020 to abdicate his share of the airline’s capital had even been made. The renationalisation process had been managed by the former minister of Infrastructure, Pedro Nuno Santos.
On Friday it was reported from the commission that the consortium Atlantic Gateway also received money from TAP to pay the salaries of the private shareholders.

Photo: Lusa – José Sena Gulão