TAP expects to generate €10 billion for the Portuguese economy by 2030

  • ECO News
  • 29 April 2021

In an opinion article, Miguel Frasquilho and Ramiro Sequeira defend that it is "important to know the return" of the state aid for the Portuguese economy and public finances.

According to a cost-benefit analysis requested by the airline, the public intervention in TAP could cause a return to the economy of up to €10 billion by 2030. Chairman Miguel Frasquilho and CEO Ramiro Sequeira unveil the number in an opinion piece entitled “Saving TAP: The return for the Portuguese economy” and published this Thursday on the ECO website.

The two administrators admit that there are several perspectives on the state aid to TAP, which has already received €1.2 billion and could be given a total of €3.7 billion by 2024, according to the restructuring plan proposed by the Portuguese authorities to the European Commission. Therefore, it is “important to know the return” of the state aid for the Portuguese economy and public finances, they argue.

“To bring numbers and objectivity to this debate, we have prepared a cost-benefit analysis of two alternative scenarios, leaves no room for doubt: saving TAP returns to the Portuguese economy an amount of over €10 billion by 2030, compared to a hypothetical scenario in which the state aid had not been granted,” they say, pointing to the ten-year period during which TAP is forbidden from asking for new aid.

It is assumed in the opinion piece that without state aid, TAP would enter a “complex and lengthy” bankruptcy process, which would cause the end of the national airline. The loss in tickets to Lisbon alone would be around 3 million (or 13%) per year or 11 million tourists by 2030. Simultaneously, there would also be a reduction in Portuguese exports (replaced by imports), the loss of jobs, and collateral effects for suppliers.

Based on what TAP represented in 2019, the estimate is that the aid by 2024 has a potential return value between 2.7 and 3.5 times. As for public finances, it could be between 1.2 and 1.4 times the value of the aid, or 4.3 to €4.7 billion. Frasquilho and Sequeira say they believe the figures are “impressive and clearly point to the relevance, in terms of return, that TAP will have in 10 years to keep operating, ensuring territorial continuity in Portugal and connecting our country to the world.”