“Recovery is being too slow”. TAP CEO anticipates lower demand in coming months

  • ECO News
  • 22 October 2020

Ramiro Sequeira shared with the workers the operation data until September. He warns that recovery is being "very slow" and is concerned about the demand behavior for the coming months.

The pandemic has left many airplanes on the ground in recent months and the business recovery “is being very slow,” warns the new CEO of TAP, Ramiro Sequeira, who is concerned about demand levels for the coming month.

“In a context of high uncertainty, the recovery is being very slow and TAP, like its counterparts, will have to follow the path of restructuring to ensure its viability,” said the president of the Portuguese airline, now controlled by the state, in a message shared with the workers to which ECO had access and where it reports operational data until September.

The data leave no doubt about the impact of the pandemic on the Portuguese company:

  • TAP reduced its capacity (ASK available seat kilometer) by 72% in September 2020, compared to September 2019;
  • TAP reduced the number of flights by 68% in the same period of analysis;
  • The overall average load factor for TAP flights between May and July, after the period of almost total stop, is 60%, twenty percentage points below the overall average rate for 2019, despite the reduction in capacity.

Although most countries have already opened borders and lifted restrictions on the movement of people after the first wave of the pandemic, the aviation sector will remain under pressure in the coming years. IATA expects world traffic to recover from last year’s figures only in 2024.

In TAP’s case, looking ahead to the coming winter months, the behaviour of demand leaves signs of concern with Ramiro Sequeira. The current demand is below that of the summer months and reservations are made less and less in advance, usually for the following month.

“We will have to continue to adapt our flight planning to this new market dynamics. This scenario will only be an exception to the end-of-year holiday period, during which we plan to be sized for the slight increase in demand expected,” stresses Ramiro Sequeira.

TAP is in the process of restructuring, after the state has rescued the airline with an aid of 1,200 million this year, and the government expects another 500 million in 2021. About 1,600 workers will leave by the end of the year. The restructuring plan, which is still being worked on, is not yet known.