TAP reported losses of €1.6 billion in 2021

  • ECO News e Lusa
  • 11 April 2022

The company's revenue improved compared to the previous year, but the cost of closing down its aircraft maintenance subsidiary in Brazil led to an increase in losses.

Portugal’s national flag carrier, TAP, had a loss of almost €1.6 billion last year, despite an increase in the number of passengers carried and revenues over the previous year, the company said on Monday.

In a note sent to Portugal’s Securities Markets Commission (CMVM), the airline reported non-recurring costs of €1.0249 billion – for example, with the closure of maintenance operations in Brazil – that it said impacted its results.

In particular, it highlighted “the negative net impact from exchange rate differences (€175.5 million) related with the depreciation of the euro against the dollar, and also the depreciation of the BRL [Brazilian real] against the euro”

In the information sent to the CMVM, the company also says that operating revenues totalled €1.3885 billion, an increase of 328.4 million (+31.0%) compared to 2020 operating revenues.

In addition to the increase in passenger revenues of €218.8 million, “this figure was particularly favored by the increase of cargo and mail revenues, which has soared by 88.0% (€110.5 million), fully offsetting the decline in maintenance revenue of €13.7 million YoY (-20.1%).”

In a seperate news release, the company cited a “significant” recovery in recurring EBITDA [earnings before interest, tax, depreisation and amortisation) in the second half of 2021, which it said offset the first-half losses, “allowing 2021 to close with a positive recurring EBITDA of €11.7 million.”

It recalled that the first half of 2021 “was marked by severe restrictions on domestic and international mobility due to the Covid-19 pandemic, leading to an almost total grounding of the airline’s aircraft for several months.”

Throughout the second half of the year, it went on, “there was a gradual reopening of borders, although two of TAP’s main markets, Brazil and the USA, only resumed international flights with Portugal during the last quarter of the year.”

In terms of liquidity, as in the previous year, in 2021 TAP stated that it continued to focus on steps to preserver its liquidity, with capital increases in May and December 2021 of €462 million and €536 million respectively, as part of the goverment’s ‘COVID-19 Damage Compensation and Restructuring Aid’.

According to the information released, TAP ended the year with €812.6 million in cash, 57% more than at the beginning of the year.

With regard to its route network, in 2021, in addition to reopening destinations that were closed, TAP recalled that it launched flights to and from new destinations such as Montreal, Cancun, Punta Cana, Maceió, Zagreb, Ibiza, Fuerteventura, Agadir, Oujda, Monastir and Djerba.

In recent weeks, it says in the statement, the war in Ukraine has caused relevant macroeconomic impacts, particularly at the level of international financial markets, including rising interest rates, as well as rising fuel prices, including jet fuel, “which has grown by over 30% since the beginning of the conflict, and a range of goods and services which has led to growing inflation.

“Additionally, the conflict led to restrictions on the circulation of airspace near the region, restrictions that remain in place at the date of approval of these financial statements, as well as the imposition of economic, financial and other sanctions on the Russian Federation and individuals associated with the Russian regime by the European Union, the United States and other countries, with impacts on the movement of people, goods and financial flows,” it adds.

It stresses the uncertainty about the duration, extent and impact of the conflict, as well as the sanctions imposed in its wake, and that it is impossible to predict potential effects, “including the impacts on inflation and fuel prices in the coming months and years.”