Azul threatens to break partnership with TAP over €200 million

Azul, the airline founded by David Neeleman, has threatened to tear up its partnership with TAP if it does not pay back a debt of €200 million because of a bond loan made in 2016.

The partnership involved increasing clients in the Brazilian market which is a strategic market for TAP and one of the most valuable for TAP’s eventual privatisation.

In an interview with CNN, the CEO of the company revealed that they want new guarantees to be added to the reimbursement of the amount and that they have already spoken to the three interested parties in the privatisation of the company: Lufthansa, Air France KLM and IAG, owner of Iberia and British Airways.

In addition, they have already hired a law firm to try to resolve the situation, and admits, it is prepared to go to court.

“It is time to demand our rights,” said Azul CEO John Rodgerson, referring to the process of selling TAP. “They are taking these good things from TAP SGPS for TAP S.A., but they want the debt to be in TAP S.A.. This is obviously against the law,” he criticised.

In this respect, “we thought it prudent to hire a law firm to talk to TAP and the Portuguese government about having more guarantees or getting the money back,” he added.

Azul is a creditor of TAP after TAP was given a shareholder loan convertible into shares made in 2016 after the privatisation of 61% of the company to the Atlantic Gateway consortium comprising entrepreneurs Humberto Pedrosa and airline mogul David Neeleman.

At the time, the Brazilian businessman was the main shareholder of Azul, the company he founded. Today, he has less than 5% of the capital. The loan convertible into shares to the amount of €90 million was used to capitalise TAP SGPS, or “Bad TAP”, as the company’s CEO classified it.

At the end of 2023, the amount owed to Azul, including interest, was around €160 million. By the date of repayment, in 2026, it will increase to €198 million. And it is this debt that Azul, which is facing some financial problems, wants to see repaid or, at least, have additional guarantees for its payment.