TAP pursues hedging strategy as cushion against escalating jet fuel prices

TAP, like most airlines, is sensitive to fluctuations in fuel prices. For this reason, it has implemented hedging strategies, and this year it decided to reinforce this “insurance.”

With the conflict in the Middle East causing prices to skyrocket, it has a price ceiling on 40% of the kerosine it will use.

In presenting the company’s financial results this week, although it does not directly refer to the current context of high tension between the US and Iran, the airline led by Luís Rodrigues states that the “current coverage rate is around 40% for 2026”. In 2025, according to the previous projection, coverage was around 31%, with fuel costs shrinking by 5.4% to €989.8 million for that year.

In 2025, and in comparison to 2024, the cost per ton of fuel was much higher, reaching €883 in the second quarter. At the end of the year a ton cost €797 euros, having skyrocketed in February, which is why, according to the business daily Negócios, the company does not expect a severe impact on the first quarter’s accounts.

As to its financial results for 2025 which were released this week, TAP said its profits had tanked 92% because of a one-off fourth quarter tax payment.

However, taking this aside, the airline, currently in the process of a part-privatisation process, enjoyed higher revenues from increased passenger numbers and stronger margins.

TAP’s CEO Luís Rodrigues said that despite the challenging environment, with cost inflation and significant industry-wide supply chain and operational constraints, it “maintained resilient margins and strengthened its financial position”.

Rodrigues said TAP will launch two new routes to Brazil, increasing its network there to 15 destinations, while expanding its Porto operations with new routes and a maintenance hub.

TAP posted a profit of €4.1 million, down from the €53.7 million in 2024 which was the fourth consecutive year that the airline has made a profit.

The fall was mostly to do with a €42 million one-off fourth.quarter levy from a downward revaluation of deferred tax assets – future tax credits it will use – after the Portuguese parliament in November cut the corporate tax rate from 20% to 17% by 2028.

And the Minister of Infrastructures, Miguel Pinto Luz, has made it clear that the Portuguese State will cover an eventual €189 million debt, which the Brazilian airline Azul says TAP owes it, pending the outcome of a legal case brought by Azul and not pass this on to the eventual buyer.