TAP restructuring will continue under private ownership
Portugal’s State-owned airline TAP will have to meet its restructuring obligations with Brussels even after the company is privatised later this year or early next year.
The Portuguese government is currently preparing a competitive tender competition for the sale of a controlling share in the airline which could be anywhere between 51% to 100%.
However, TAP has been undergoing a painful restructuring process over the past few years in return for allowing the Portuguese tax payer to bail out the company by more than €3Bn that it needed to keep it solvent in the short term. That process will continue until 2025.
The government can, however, ask for changes to made that the European Commission has to approve.
The conditions set out by the EC in 2021, including those regarding the restructuring plan, apply regardless of the structure of the property, meaning that they apply equally if the company is private or public.
In December 2021, the EC approved a €2.55Bn cash injection by the Portuguese State into TAP to which was added financial offsets to mitigate the effects of the pandemic, bringing the total to €3.2Bn.
In return for the capitalisation of the airline, Brussels imposed a far-reaching restructuring plan as well as imposing restrictions to safeguard competition with TAP having to forego 18 slots at Lisbon’s Portela airport that went to easyJet and the imposition of a limit of 99 aircraft by the end of 2022.
On Thursday the government will approve a decree-law for the reprivatisation of the company opting for a direct sale method with the percentage of the company to be sold exceeding 50%.
Within government circles it is said that the State will want to retain a share in the business of between 20-30%, although the Prime Minster, António Costa has not ruled out selling 100% for the right price.
Meanwhile today (Wednesday), The CEO of the IAG Group, Luis Gallego, which owns Iberia and British Airways, and which is one of the interested parties in buying TAP, was in Lisbon to take part in the World Aviation Festival.