TAP lost 582 million euros in the first half of the year, a period significantly marked by the impact of the pandemic.
TAP recorded a 582 million euro loss between January and June 2020, a period largely marked by the impact of the pandemic. The Portuguese airline carried 4.9 million fewer passengers than in the same period of 2019, a fall that significantly punished the business.
A note sent to CMVM explains that the airline’s losses represented 96% of the net profit of the entire TAP group, whose loss totalled 606 million euros. In addition to the pandemic, the losses were also aggravated by “aggravated by the impact of jet fuel over-hedging costs in the amount of 136.3 million euros and negative net currency exchange differences of 58.0 million euros.”
But the operation was totally undermined by the impact of lockdown and the fall in demand, something evident in the company’s accounts. “The decrease in activity since March 2020, more than offset the good performance observed in the first two months of the year, severely impacting TAP’s performance in H1 2020,” the airline said.
EBITDA slipped into negative territory by 128.8 million euros and the company made “730 million euros less in passenger income, which fell 57.2% YoY in the first six months of 2020”. Looking at total operating income, it sank by 55.4% in H1 to 646.1 million euros.
“TAP was fast and agile to act, at the first signs of the impact of the pandemic, adjusting capacity to the new demand scenario, thus minimizing operating costs, with the goal of preserving cash. The capacity cut of 33.9% YoY in terms of ASKs already in March, was key to decrease variable costs, considering that these represented approximately 60% of TAP’s total operating costs in 2019,” the Portuguese company explained.
In fact, the company avoided a further deterioration in liquidity with a reduction in operating expenses of 460 million euros, a 30% cut in expenditure. “Daily cash burn decreased approximately 50% between the month of April and the month of June 2020, reflecting the implementation of initiatives aimed at containing the impact of the pandemic on liquidity,” TAP added.