Government to continue TAP sale despite greatest aviation crisis since the pandemic

The aviation industry is facing the biggest crisis since the Covid-19 pandemic, due to the rise in jet fuel costs, directly driven by the conflict in the Middle East.

The price of a barrel of kerosene, the fuel used in planes, which is a petroleum derivative, has doubled since the first attack by the USA and Israel against Iran, on February 28, and last Thursday it exceeded US$216.

Despite this scenario, the Portuguese Government is not planning to  change its TAP privatisation schedule, according to the Minister of Infrastructure and Housing.

“We’re keeping on course” for the airline’s privatisation calendars, stated Miguel Pinto Luz. This means that the forecast for completing the sale of up to 49.9% of the Portuguese carrier’s capital by July this year remains.

Meanwhile, IAG, the holding company that owns Iberia and British Airways may pull out of the competition to buy a 49% share of TAP according to Bloomberg.

Although an official source declined to comment suggesting that IAG was still in the race with Lufthansa and Air-France-KLM.

Bloomberg emphasises the same point, explaining that there is a possibility of submitting a non-binding offer to buy TAP until the deadline of April 2, when privatization candidates must present a proposal that already includes the price (estimated at €1.6Bn) and the strategic plan they propose for the Portuguese company. Since it is a non-binding proposal, it may not lead to a final offer.

From the start of the privatisation process, IAG has expressed its interest in TAP, but has also warned of the need for the purchase to meet the group’s profitability goals. It has never hidden its preference for acquiring a majority stake and all economic rights in TAP, because it considers this to be more efficient and better for its commercial strategy.

Sources: Expresso and Jornal Económico; Credits: TAP