TAP’s revenue prospects strangled by congestion at Lisbon airport
The US ratings agency Standards & Poor says that TAP’s reduced fleet and congestion at the airline’s hub at Lisbon’s Humberto Delgado airport is limiting the company’s growth and revenue potential.
At the same time it maintained its rating for the airline at BB-, which is considered ‘junk’ status by the market.
According to S&P forecasts, TAP should close 2024 with an EBITDA of between €830 million and €860 million – a slight improvement on the €832 million achieved in 2023.
“TAP reported resilient results in the first half of 2024, reaching an EBITDA of €345 million (similar to last year) and including a slight increase in yield”, an indicator that translates the average amount paid by a passenger to fly one kilometre, the analysts highlight in a note from S&P reports the business daily Negócios.
Another of the points praised by the agency is the maintenance of fixed costs “year after year”. “This was due to a gradual increase in capacity”, associated with “lower fuel consumption and reduced operating costs” The last point was achieved, above all, by a cut in external services on outsourced aircraft and crew hired to carry out operations for TAP, called ACMIS.
TAP’s President Luís Rodrigues confessed at a tourism conference at the end of the last year that when he arrived at TAP, in April 2023, he found “a disorganised operation […] where there were half a dozen ACMIS and at the same time we had planes on the ground that were not being used. There was a total mismatch in schedules, a set of problems in the operation”.
More than a year after taking over TAP, and “despite the sustainable increase in labour costs under the new Company Agreements”, which meant the reversal of salary cuts and increases in pay, S&P says that in terms of costs, there has been an overall improvement and a “disciplined control”.
Looking ahead, S&P foresees a continuous growth in EBITDA to 2025 but has warned about some factors that could compromise its targets.
“We think that TAP’s reduced operating fleet – consisting of 99 aircraft at the end of June 2024 versus 105 in December 2019, before the implementation of the restructuring plan – and its highly congested hub in Lisbon will limit the potential for significant revenue growth in the medium term”.
Moreover,, the delivery of some of the Airbus aircraft still due as part of a controversial agreement for the purchase of 53 aircraft negotiated by David Neeleman, was once again postponed.