Plan for TAP state aid ‘imposed’ by EU Commission

  • Lusa
  • 25 June 2020

Portugal's Minister of Infrastructure said on Thursday that the plan to aid TAP was an imposition of the European Commission (EC).

The Minister of Infrastructure, Pedro Nuno Santos, said on Thursday that the plan to aid TAP was an imposition of the European Commission (EC) and that the Portuguese government defended the “use of the temporary framework” of the Covid-19 pandemic.

“[This plan] was the only one that was accepted [by the European Commission]. We did not propose it, the EC imposed it, stressed the Minister of Infrastructure and Housing, in an interview to the “Politics with Word” podcast of the Socialist Party.

He explained that “the representatives of the Portuguese State, in contacts with the EC, defended the use of the temporary framework” Covid-19.

However, Brussels’ understanding “was that TAP was a company in difficulty in 2019 and, as such, could not resort” to that option.

For this reason, “the option on the table is the only one” that Brussels “said was available to TAP”.

The minister was also asked if he has confidence in the current Executive Committee of TAP to make the restructuring plan of the company.

“I trust the [TAP] Board of Directors,” he replied.

Pedro Nuno Santos also said he is “very confused that the CEO of a company that has its hands outstretched thinks it can relate to the state” in this way.

“As if they were doing us a favor,” he criticized.

On Tuesday, TAP’s CEO, Antonoaldo Neves, admitted that the Executive Committee of the carrier is available to accept a member nominated by the State, who is currently only present on the Board of Directors.

Antonoaldo Neves, who was speaking at a Parliamentary Committee hearing, stressed that he did not see “any problem” that the State, as a shareholder of TAP, is also represented on the Executive Committee, even considering it a “productive” option.

The minister added that he saw Antonoaldo Neves’ statements with “some perplexity”, since the person who “is going to make the injection” of capital into the company is the Portuguese State, therefore, “it was not the current Executive Committee that would be doing a favour by showing willingness to accept a new member of the Executive Committee”.

Pedro Nuno Santos said, however, that the important thing, “at this stage”, is “to guarantee what is done with every penny” that is going to be injected into TAP and that the control and monitoring system that has been proposed “is much more effective than simply having a member on an Executive Committee” where the State would not be in the majority.

On 10 June, the European Commission approved “Portuguese emergency aid” for TAP, a state support of €1.2 billion to meet “immediate liquidity needs” with predetermined conditions for its reimbursement.

However, as TAP was already in a weak financial position before the Covid-19 pandemic, the company “is not eligible” for state aid under the more flexible Brussels rules due to the outbreak, which are aimed at “companies that would otherwise be viable”.

To MPs Antonoaldo Neves said he expected “nothing less than an extremely tough European Commission” in return for the aid the airline would receive and regretted that TAP had not been given state aid in the form of guarantees to pay off loans with private banks.

The CEO considered the European Commission’s decision not to allow TAP to use the special support mechanism for airlines in the context of the Covid-19 pandemic to be ‘unfair’.

The CEO also said it was “obvious” that TAP is unable to repay the loan it will receive of up to €1.2 billion and wanted to present the restructuring plan in three months.