Sergio Palma Brito. “Now the TAP problems will start”

Although TAP has been given the green light by the Commission regarding the restructuring programme, nothing is guaranteed regarding the future of the air carrier. State assistance authorized by the commission ensures the airline’s path toward long-term viability. This feasibility is ensured by a TAP with a qualified state shareholder, independent and responsible management, and motivated workers. None of these requirements are properly guaranteed”, a guarantee given to Nascer do SOL by Sérgio Palma Brito, author of TAP que futuro? How did we get here?

However, the airline will have to give 18 places at Lisbon Airport. A claim from low-cost airlines such as Ryanair and easyJet. However, it is exempt from further layoffs, pay cuts or return planes.

The Irish airline has already asked the European Commission to release about 5% of its TAP slots at Lisbon Airport by the summer of next year, rather than delaying them to November. “The commissioner’s decision to postpone this 5% delivery threshold, the equivalent of 18 daily slots, from summer to winter 2022 hurts competition and consumer choices in Lisbon and will delay the recovery of Portela Airport during the pandemic,” Ryanair Group said. CEO Michael O’Leary.

The Infrastructure Minister said TAP’s minority stake in Groundforce (49.9%) would only be sold under “satisfactory conditions for TAP”. “That’s why we say we’re not going to get a little faucet,” he said.

Focus on business strategy

According to Sergio Palma Brito, once this predicament is overcome, there must be a business strategy that will stimulate the joint efforts of shareholders, managers and employees. “Priority for the Lisbon hub appears to be assured, as the ‘regional cohesion’ routes departing from Porto and Faro have been abandoned,” he added, adding that “the few transcontinental flights from Porto are so strict that their demand is inexhaustible that pivot flights.”

The aviation specialist recalls that in 1994, the European Commission’s decision was based on the government’s commitment to privatize TAP from 1997. In 2019, the restructuring plan is based on a state-owned company. “There is a tactical reference to privatization, when the minister says that ‘the airline does not live in isolation’ in the current situation and that the strategy was to work so that the company remains ‘in a strong aviation group,'” referring to the Lufthansa Group.

Is the company that is part of this group the state-owned TAP or the privatized company? The feasibility of TAP includes at least 80% privatization. TAP’s focus on aviation appears to mean that TAP should leave maintenance to Brazil, Groundforce and Cateringpor which is welcome,” he says.

Regarding the missing time slots, the official considers that it does not look large and that the size of the TAP, measured in terms of passenger width/km and occupancy rate, is ultimately a result of the market. “Last but not least, TAP cannot benefit from new state aid within a ten-year period. Anyone alive will see it and Commissioner Vesteiger will say it only made the trip possible and not the feasibility of TAP,” he told Nasir do Sol.

Injections and potential stakeholders

Also on Friday, the finance minister ensured that TAP would receive an infusion of new funds from the state by the end of the year. “With the successful approval of the restructuring by the European Commission, we will inject another 530 million next week,” said Joao Liao.

Pedro Nono Santos stated that €3.2 billion may be enough to make TAP viable. But he left a warning: “If there is no more serious disruption in the course of the next few years, this number is more than enough” and noted that “the last beneficiary of this investment is really the Portuguese economy. Therefore, the Portuguese receive if TAP continues to serve the Portuguese economy ».

And he gave figures: the company that exports 3 billion euros, which buys 1.3 million euros annually from various national companies. And it has an enormous impact on the national economy.” An argument that matches European Commission data, which states that TAP “plays an essential role in the growth of tourism and the Portuguese economy as a whole and is an important employer in Portugal”, having been responsible, in 2019, for more than 50 Percentage of arrivals and departures at Lisbon Airport, hence the approval of the new Portuguese system.

The minister admitted that there were six interested in national airlines. “We believe that TAP should form part of a group. There are many people interested in TAP. There are six, three funds and three aviation groups.” Pedro Nono Santos says that “to do business, it has to be with an aviation group that understands the sector.”

It should be noted that the amount approved by the European Commission divides between 2.55 billion to restructure and return to the company’s viability, as well as 107.1 million to compensate the company for the damages caused by the epidemic between the beginning of July and 2017. The end of December 2000. The Minister of Infrastructure said “Today is a very important day for TAP, for the country and for the Portuguese government,” he said, adding that the arguments were well received and the results were good. “The Portuguese government’s work has been done.”

It is worth noting that the air carrier has already received emergency financing of 1.200 million euros in 2020, to which it added 462 million euros in 2021. However, the minister confirmed that a loan of 360 million euros will now be taken from individuals. Between 2021 and 2022, which will have a general guarantee of 90%.

Impasse

Until the end of last week, Antonio Costa confirmed that he refused to enter into a state of anxiety and was “quietly” waiting for a decision from Brussels. “I know we have a strong case. We know that the dialogue with the European Commission has been very intense,” he just said.

The prime minister’s reaction came after the Minister of Infrastructure and Housing revealed that the airline would have to close if the plan was not approved. “We are talking about the only airline operating in Portugal that has a hub, that operates transcontinental flights between Brazil, the USA, Africa and Portugal and distributes to the rest of Europe,” the official said.

The government handed over to the European Commission, a year ago, a plan to restructure the company TAP, having at the same time implemented measures such as reducing the number of workers. After the European Commission approved, on June 10, 2020, a government support of up to 1,200 million euros for TAP, the company had six months to present a restructuring plan that would convince Brussels that the company would have future viability.

As early as August, the European Commission admitted it feared TAP’s $3,200 million restructuring aid would violate competition rules, a complaint repeated by other airlines such as Ryanair.

Brussels had also said it doubted that the 3,200 million subsidy would ensure the company’s definitive survival, despite acknowledging the importance of the Portuguese state’s rescue of the airline. The government has a different understanding, which was to state that “the TAP will be appropriately invested to be able to continue its activity, and make a strong contribution to the Portuguese economy”.