Government injects almost €1B in TAP this year

  • Lusa
  • 16 April 2021

According to the Stability Programme revealed this Friday, the Portuguese government plans to inject €970 million into TAP this year.

The Portuguese government plans to inject €970 million into flag carrier TAP this year, a measure classified as temporary and whose effect on public accounts is reversed in 2022 and 2023, according to the Stability Programme revealed today.

The figure is included in a table of invariant measures in the document approved by the cabinet on Thursday, and that entered the parliament site shortly after midnight.

After the injection of €970 million “to be adopted” in 2021, the government expects the effect of €170 million of that operation to be reversed in 2022, estimating the same for the remaining 800 million euros in 2023.

On 12 March, the government submitted a notification to the European Commission for interim aid to TAP of up to €463 million that “will allow the airline to ensure liquidity until the restructuring plan is approved,” it was announced.

In a statement, the ministries of finance and infrastructure and housing said at the time that, “despite TAP being under assistance under the rescue and restructuring aid,” as part of the negotiation of the plan between Portugal and the European Commission,” it was accepted that aid of up to €463 million could be notified.

“If approved, this amount will reduce the cash needs for 2021 that were included in the restructuring plan,” the note added.

The notification of this aid makes it possible to respond more immediately to TAP’s cash needs, the two ministries said.

Consequently, the amount of the company’s cash needs in the Restructuring Plan should be adjusted.

“This situation stems from the particular severity of the impact of Covid-19 on the aviation sector and its recent evolution,” the government justified.

In 2020, TAP returned to state control, which now holds 72.5% of its capital, after the company was severely affected by the Covid-19 pandemic and the European Commission authorised state aid of up to €1.2 billion to the Portuguese flag carrier.

Six days after the executive’s statement, the European Commission confirmed it had received a request from Portugal to provide interim state aid to TAP. The government announced it would be up to €463 million, with Brussels examining it as a “matter of priority”.

“Separately [to the €1.2 billion state aid already approved in June 2020], the Portuguese authorities have notified a support measure for TAP in the context of the coronavirus outbreak,” confirmed an official source from the EU executive in a response sent to Lusa.