The group ended 2020 with losses of €1.418 billion, over 13 times the €105 million it lost in 2019.
The TAP group, of which Portugal’s national airline forms a part, had a 2020 loss of €1.418 billion, over 13 times the €105 million it lost in 2019, according to the report and accounts of Parpública, the public entity that holds most of the Portuguese state’s majority stake in TAP SGPS, the group holding company.
Regarding TAP, the Parpública report states that “the 2020 operation and results were significantly impacted by the drop in activity seen from March, as a result of the Covid-19 pandemic, which affected in an unprecedented way the civil aviation sector globally.”
It notes that the losses of TAP S.A., the aviation unit, as €1.2303 billion.
Thus, in the report’s words, what were already its “legitimate concerns” about TAP were “extraordinarily amplified by the impacts – on the airline, the sector, the economy and society – of the consequences of the current health crisis.”
It notes that the extraordinary measures to be adopted go “far beyond the possibilities” of its intervention as a shareholder – a reference to the need for further state funding, as approved by the European Union authorities.
The group ended 2020 with negative shareholder funds of almost €2.128 billion.
Despite this, Parpública made no provisions in 2020 to meet its share of TAP’s negative equity because it “considers that there is no obligation to cover additional losses beyond the investment it has made.” However, with regard to its investment in bonds issued by TAP, a provision of €12.2 million was made to address possible losses, taking into account the “equity situation” of the company.
The TAP group’s revenues last year were €1.072 billion, around one third of those of 2019, according to the Parpública.
The report notes with regard to TAP that “negotiations with the European Commission for approval of the Restructuring Plan are currently taking place and should conclude soon despite being impacted temporally by the effect of the pandemic in the first quarter of 2021.”
As well as Parpública’s 50% stake in TAP SGPS, the group holding company, a further 22.5% stake was taken over by the Directorate-General of Treasury and Finance following negotiations with private shareholders, giving the Portuguese state effective control.
This week, the Directorate-General injected a further €462 million into the group, and now holds around 92% of TAP SGPS. The remaining 8% or so is held directly by TAP S.A. itself.