The Portuguese Minister of Finance, Joao Leao, has sent an urgent message to the European Commission for the approval of state aid to keep the airline afloat with a public majority TAP Air. It has been through an interview with Reuters, in which the member of the Government has assured that he expects the green light for financing by the end of March.
The oxygen balloon for the largest Portuguese airline could go up to 2,000 million euros, as it transpired last month. A support that would be accompanied by restructuring measures such as the adjustment in 2,000 jobs and a pay cut of up to 25%. With these funds guaranteed by the State, TAP would have its financing needs covered until 2024.
If Brussels gives its permission, TAP could receive up to 1,170 million euros of state aid in 2021 alone. The airline, with 72.5% of the capital in public hands, was already rescued in June with 1,200 million. Converting the latter support into capital would bring state participation closer to around 90%, according to Minister Leao. “The main objective of the plan is to make the company sustainable,” he told Reuters.
Once the negotiations with Brussels are activated, the Finance Minister does not hide the intention that TAP can be re-financed in the markets as soon as possible and even to be put at the disposal of a new investor or an alliance. “The government’s support measures are limited in time. It is important that the company move forward by itself so that as soon as possible, if possible starting next year, it can stop being financed by the State.” Afterwards, Joao Leao stated that “it could be interesting have another player that can help TAP to be a competitive and profitable company. “
The latest results of the Portuguese airline, at the end of the third quarter, reflect some losses of € 700 million. The company has bonds for 725 million, on which Leao has commented that there is no reduction on the table, but without ruling out any possibility related to that debt in the framework of negotiations with the European Commission.