TAP: 107 airplanes, 9,143 employees and “a brutal debt”

The private shareholders of TAP do not want to give in, but the Portuguese government is even more determined to not renounce the conditions it imposed to help the national airline. Faced with this scenario, there will be no alternative but “assertive intervention” in the company, as Pedro Nuno Santos said, which will cause TAP’s nationalization. If this happens, the State will have control of TAP, but in the package, besides planes and workers, there will be a debt of 3.3 billion euros.

The pandemic has aggravated TAP’s financial situation, but the problems were already present last year. And that is why the European Commission gave the “green light” to the state aid in the airline, as long as it was granted in the framework of rescue and restructuring aid and not through temporary and exceptional state aid (an exceptional regime created to support companies affected by the coronavirus pandemic). On December 31 of last year, TAP was already in “difficulties”, said the European Commission.

The problem is that this “green light” from the European Commission for the aid of up to 1.2 billion euros in the airline came with a condition: the loan would have to be repaid in six months or the company would have to be restructured. A condition that does not please the private shareholders.

Regardless of this, the negotiations between the government and the private shareholders are not going well and this Monday, in a new attempt to reach an agreement, the private shareholders rejected the state’s proposal. In this scenario, and as Pedro Nuno Santos, Minister for Infrastructure and Housing, says that the state’s position is “intransigent”, there will be no alternative but “assertive intervention”, that is, the airline’s nationalization.

If this happens, TAP will once again be controlled by the state – which, despite having 50% of the company’s capital, does not have the control – reversing the privatization made by Pedro Passos Coelho’s government. Thus, in the deal, the state will be left with an airline company that it says is fundamental to the country, but with serious issues.

107 planes in March. Six leave by the end of the year

According to a statement sent this Monday to the Securities Market Commission (CMVM), where TAP reported a loss of 395 million euros in the first quarter, three “new generation Airbus aircraft”, two A330 neo and one A321 neo, joined the airline and one A319 left operation. TAP ended the first quarter with a fleet of 107 aircraft (including regional aircraft operated by Portugália and White). However, given the financial situation, the board is expected to reduce this fleet.

Therefore, since March and until the end of the year, the airline has already confirmed the ‘retirement’ of six aircraft (one A321, one A320, three A319 and one E190), whose [leasing] contracts expire later this year. “Besides these, additional aircraft departures are being studied to align with the fleet plan currently under review,” the document states.

9,143 workers. Over a hundred have already left

In the first quarter of the year, TAP had 9,143 employees, 9% more than in the same quarter of last year (8,387), according to the communiqué sent to CMVM. In terms of staff costs, these workers represented an expense of 162.7 million euros for the airline in the first three months of the year, an increase of 5% compared to the same period last year.

However, these figures do not take into account the employees who eventually left the company due to the pandemic. On April 2, TAP joined the simplified lay-off, putting 90% of the approximately 10,000 employees working for the TAP Group on this scheme. However, it asked twice to renew this lay-off (ending in June) and last week, CEO Antonoaldo Neves announced that the company would join the new model in July.

But in March, the airline also failed to renew the employment contract for about 100 workers. According to Público newspaper, quoting an official TAP source, this measure covered employees “with various functions”, but cabin crew members were the most affected, especially those who had been hired in previous weeks.

From now on, it remains to be seen whether the restructuring plan that the national airline will undergo will involve the dismissal of workers

3,300 million in debt

For many months, much speculation about the airline’s debt was spread, and at the end of May, during a hearing at the Commission on Economy, Innovation, Public Works and Housing, Pedro Nuno Santos finally unravelled the mystery. Around 1 billion euros in net debt at the time. But according to the communiqué sent by the CMVM, with updated data from the first quarter, on March 30, TAP’s net debt amounted to 1,126 million euros.

According to Pedro Nuno Santos, the debt amounts to 3,300 million euros if the debt from aircraft leasing contracts is taken into account. “We are talking about a brutal debt”, said the Minister for Infrastructure and Housing at the time.