TAP expects new €990 million injection to arrive at the end of 2022

  • ECO News
  • 23 August 2022

TAP CEO says the company is growing above its peers, but is "cautiously optimistic about the future."

TAP expects to collect the €990 million it still has to receive from the state at the end of the year. Access to market funding will only happen in the second half of 2023. TAP’s CEO guarantees that the company is “above the restructuring plan” and growing above peers, on the day the airline presented its H1 results.

“We are above plan. Revenue recovery and profitability are performing well. That is something we are pleased about. But we are cautiously optimistic,” said TAP CEO Christine Ourmières-Wineder, who warned of the difficulties the company faces in the third and fourth quarters.

The CEO also said that the company is “growing above peers”. In the statement released to CMVM, the company reveals its revenue doubled in the second quarter compared to the same period last year, more than the IAG group, Air France/KPLM and Lufthansa.

The Chief Financial Officer (CFO), Gonçalo Pires, said that TAP would receive the last tranche of public aid, worth €990 million, at the end of the year. The State guaranteed loans of 360 million, which had been scheduled for this year, will not be paid.

In the first half of 2023, TAP will go to the market, as per the plan agreed with Brussels, to refinance around €700 million of two issues maturing next year and in 2024.

TAP announced this Tuesday that it closed the first six months of the year with a loss of €202.1 million, less than the €493 million it recorded in the same period of 2021. The company also recorded positive earnings before interest and taxes (EBIT) of €4.4 million, which represents a year-on-year increase of €381.7 million.

“The results show that the recovery plan is the right plan for the company,” the CEO pointed out, assuring that TAP is “on the path to achieving sustainable profitability.”

Adversities for the second half of the year

Regarding the second half of the year, the outlook is mixed. TAP’s CEO emphasised that “the level of bookings for the second quarter is strong,” but the industry continues to face some adversities.

One of the constraints concerns airport operations. In August alone TAP had to cancel 156 flights and reschedule 14,000 tickets. Christine Ourmières-Widener said that the situation was very complex in July and stabilised somewhat in August, but that disruptions are likely to persist. The company has set up a multidisciplinary team to manage

Geopolitical uncertainty and its as-yet-unknown ramifications, the risk of a recession that is beginning to be commented on by several players in the market, inflation that may impact demand and costs, and the fluctuation of exchange rates were other factors pointed out by the CEO.

Gonçalo Pires said he expected jet fuel prices to remain at current levels until the end of the year. TAP’s turnover, which totalled €409 million in the first six months, is expected to close the year at almost €1 billion, the chief financial officer said. The level of hedging should be close to 50%.

TAP’s CEO responded to criticism from unions, particularly the structure representing pilots, which has accused the board of having disastrous management. “You can only judge management by the results it delivers and I think today we are delivering good results,” said Christine Ourmières-Widener.

The CEO added that the negotiation of new collective labour agreements, replacing the emergency agreements that run until the end of 2024, will be a priority for the second half of the year. She announced that 430 crew members had been hired in the summer.