TAP will not be included in state accounts

The increase in the state’s shareholder position in flag-carrier TAP will not weigh on public accounts, the finance minister said on Friday, noting that the impact of the 946 million euros loan had already been assumed in the amending budget.

João Leão’s clarification on the impact of the investment in TAP and financial aid to the company on the deficit and public debt was made today during the press conference in which the agreement between the government and TAP’s private shareholders was announced, following which the state now holds David Neeleman’s stake and owns 72.5% of the national airline.

Starting by mentioning that there are many “public companies that are not in the perimeter of public accounts”, because they have an essentially mercantile nature, such as the ports and Lisbon bus company, João Leão underlined that TAP also has a similar nature, so “it will not integrate the perimeter of public accounts.”

Leão pointed out that this year, in the amending budget, the impact on the deficit and debt of the 946 million euros loan that the State will make to TAP – and that can reach up to 1.2 billion euros – is already assumed.

The integration of TAP may still have “some additional residual effect of the debt,” but “we do not expect it to be automatic and direct [in public accounts] because [the State] has strengthened [its position] in TAP,” the minister said.

On June 10, the European Commission approved “Portuguese rescue aid” for the airline TAP, state support of 1.2 billion euros to meet “immediate liquidity needs” with predetermined conditions for its repayment.

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.”