Ex-infrastructure minister fails to explain how €55 million was paid to David Neeleman

 In News, Public Inquiries, TAP

A public inquiry into the Portuguese government’s management of public airline TAP over the past few years heard yesterday from a former minister of Infrastructure who was unable to explain how a €55 million payout to former shareholder, US-Brazilian airline mogul David Neeleman, was calculated.

At the parliament hearing on Tuesday, Portuguese MPs wanted to know how the Government arrived at the figure paid to the JetBlue airways founder as a payout to leave TAP in 2020 when the airline was re-nationalised.

But the ex-minister, Pedro Nuno Santos said that the amount paid resulted from “negotiations made by both sides’ lawyers”.

“The €55 million resulted from a negotiation process by a firm of lawyers. There was a risk evaluation which led us to opt for a negotiated settlement”, said Nuno Santos. “We didn’t pay zero as we had wanted, but we also didn’t pay what David Neeleman wanted.”

In July 2020 the Government bought out the share David Neeleman had in TAP. David Neeleman together with Humberto Pedrosa (Barraqueiro Group) held 61% of TAP from 2015 via a consortium called Atlantic Gateway.

At that time, the consortium came in with €354 million. Of this amount the State received €10 million and the rest was used to remedy a serious under-capitalisation at the airline and pay for a renovation and expansion plan which also involved buying new state-of-the-art aircraft which were more fuel efficient, technologically advanced, produced less greenhouse gases and were more comfortable for passengers.

In 2020 the State bought back 72.5% of TAP using an emergency loan of €1.2Bn agreed by the European Commission in return for a major restructuring of the airline. It said it did this to avoid bankruptcy since Atlantic Gateway were not prepared to invest any more money of its shareholders in the airline.

David Neeleman was against a loan and had to avoid litigation because when the first Government of António Costa decided recover 50% of TAP’s capital, reverting part of the share sold to Atlantic Gateway by the PSD government in 2015, the Government signed a shareholders agreement which gave the private shareholders the possibility of clawing back the capital that they had put in, in case of State non-compliance (meaning renationalisation), which it was able to do because it had a Golden Share in TAP.

The MPs quizzed Nuno Santos up to what point the shareholders agreement obliged the €55 million payment to Neeleman.

“It was an accepted fact and had consequences. Obviously someone who was a shareholder in the company wants offsets. There was an urgent need to provide public help to TAP and we didn’t have the conditions from the private (shareholders) to provide it” (this help).

“We only had two options, Nationalise, which would have also been contested in court and would have had an uncertain outcome or a negotiation. A court case would have been the worst thing for TAP and without the (State) emergency help TAP would have closed”.

It was also revealed at the hearing that Humberto Pedrosa received €11.9 million when Neeleman left TAP.

Photo: Lusa – António Pedro Santos