Capital Injection into TAP may lead to redundancies and route changes

  • ECO News
  • 15 May 2020

TAP's capital injection will have to pass through the European Commission's Directorate-General for Competition, which may impose changes on the company.

The State aid that the Portuguese government should give to the national airline, could lead to redundancies and route changes if the European Commission concludes that the company’s problems precede the pandemic. These may be the restructuring measures that TAP, which employs around ten thousand workers, may have to implement for the state to intervene.

To approve the State aid, the Commission may impose ‘tough’ conditions, according to Jornal Económico, which cites a source close to the process, stating that the Government has three scenarios on the table. The plan, which could exceed one billion euros (about 0.5% of GDP), should be completed by the end of May.

In the framework of the negotiations with TAP’s private shareholders, the most likely solution will be a capital injection, up to 250 million euros, and a bond issue.