Government admits that TAP may need more than 500 million

The additional 500 million euros that the state has set aside for TAP in the 2021 State Budget is “a still indicative figure”, i.e. it may be higher or lower, depending on the evolution of the pandemic and the restructuring plan that is approved for the national airline.

The proposal submitted by the government on Monday evening anticipates that TAP “should use all the 1,200 million euros of state loan” and recognizes as “uncertain” the amount that TAP may need next year. In the State Budget presentation, the finance minister gave more details, leaving open that the company may need more money or less than expected. The finance minister said the additional 500 million euros for TAP, foreseen in the State Budget for 2021, are an “indicative figure”, which could be higher or lower depending on the pandemic.

“All indications suggest that next year an additional sum will be needed, and our estimate at the moment is that it will be close to 500 million euros. It’s not the worst-case scenario, it’s the indicative scenario we have, and it’s the base scenario. It is a very uncertain context, the evolution of the pandemic will be determinant for the sector. In this phase, not only we don’t know what will be the evolution of the pandemic, but the restructuring plan is not approved,” said João Leão.

The minister then recalled that the civil aviation sector has been one of the “most affected by this crisis” and that, in other European countries, governments have “supported this sector and executed loans with a state guarantee, direct state loans or direct state capitalization.”

“What we have foreseen for TAP in 2021 is still an indicative and referential value, because this is what we are working on at the moment, TAP is developing the restructuring plan very intensively and this plan has to be submitted to the European Commission,” argued the finance minister.  The plan has to arrive in Brussels by December 10.

Thus, he added that “only as a result of this restructuring plan, and its approval, and the evolution of the pandemic in the sector,” will it be possible to have “a more accurate figure than will be needed next year to help the company’s liquidity,” through a “guarantee to ensure the necessities.”

“What we have planned for next year is an operation of a different nature [from this year’s loan]. It’s not the state giving the company a direct loan, but the state giving a guarantee so that TAP can have liquidity to operate next year,” he concluded.