TAP’s capital increase covers €1.5 billion in losses

  • ECO News
  • 31 December 2021

TAP approved a capital increase of €1.8 billion at its general meeting. A large part of the money was used to cover losses.

TAP’s capital increase operation, approved on Thursday at an extraordinary general meeting, included partial coverage of over €1.5 billion in losses.

The airline sent a statement to CMVM detailing the operations approved at the extraordinary general meeting: The company’s share capital increased from €503.5 million to a total of €657.85 million, through the conversion of supplementary capital contributions, in the amount of €154.4 million.

The capital was then reduced to zero to partially cover losses.

The operation included a second capital increase of €1.8 million, fully subscribed by the state, of which €1.3 billion resulted from contributions in kind, through the conversion of credits held by the Portuguese State over TAP, and the amount of €536 million was executed in cash.

This was followed by a further capital reduction to partially cover losses, with the capital shrinking by €890.2 million to a final sum of €904.3 million.

Between the two capital reduction operations, TAP “cleaned up” €1.5 billion in past losses. The company’s last annual report for the second half of the year showed that the company had €1.3 billion in negative retained earnings, plus losses of €493 million until June, and €134.5 million more in the third quarter.

TAP’s share capital is currently €904,327,865, represented by 180,865,573 shares, in the amount of €5.00 each. As a result of these operations, “Due to the Acts, the Portuguese Republic, through the Directorate General of the Treasury and Finance, became TAP’s sole direct shareholder,” the statement said.

The airline’s extraordinary general meeting on Thursday approved the second capital increase this year, with the injection of €536 million and the conversion of a €1.2 billion loan into capital.

This increase in the airline’s equity follows the green light given by the European Commission to TAP’s restructuring plan on December 21, however, forcing the company to give up 18 slots at Lisbon airport and sell its stakes in Manutenção & Engenharia Brasil, Cateringpor and Groundforce.