TAP posts Q3 profit of €111M as revenues soar

Portugal’s flag carrier, TAP, has posted a third-quarter net profit of €111.3 million, the airline announced on Wednesday in a statement to the country’s Securities Markets Commission (CMVM).

In the period, TAP said, it enjoyed “record operating revenues” of €1.1 billion – “exceeding pre-crisis levels by 7.5%” nad enabling the company to achieve “an unprecedented financial performance.”

The result, the note state, was “driven by strong operating results and positive effects from the implementation of the currency hedging policy” – which also “reduced the foreign exchange impact of the previous quarters of 2022.

“This is related to TAP’s current financial risk management strategy, which aims to reduce the volatility of the impacts of exchange rate variations on the Income Statement,” the release continues. “Even excluding the mentioned improvement in the currency hedging policy, the net result remains positive at 31.8 million euros.”

In the statement, TAP CEO Christine Ourmières-Widener is quoted as saying that the company “is confirming the solidity of its performance in the third quarter, with all financial metrics above pre-crisis levels, despite the increase in fuel costs.”

Demand in the fourth quarter, she adds, “remains quite strong, supporting expectations of a good year-to-date result. Visibility for the coming year is, however, still limited and, given the uncertainties of the current environment, it is increasingly crucial that we maintain focus on our strategic plan, which has, to date, proven to be effective.”

The release also describes the airline’s cashflow position as “solid” with €775.1 million in cash and equivalents at end-September.

“The next decisive steps to be taken are: conducting productive discussions with our labour partners for the creation of more modern Collective Labour Agreements, improving our operations and the quality of our service with the involvement of all stakeholders, the constant negotiation of all our contracts with third parties and the careful preparation of next year,” the CEO states.

The release shows that the number of passengers carried in the third quarter was twice that in the same period in 2021, and was 85% of the level of the same period in 2019.

“Additionally, during this period, TAP operated one and a half times the number of 2021 flights, or 81% of 2019 departures,” the company adds.

Operating revenues were 2.5 times those of the same period last year, at €1.119 billion, up from €657.3 million, and were at 107% of those of the third quarter of 2019.

“This was predominantly driven by fare increases and higher capacity, resulting in an increase in passenger segment revenues” to €1.002 billion, according to the release.

The airline also said that the Maintenance and Cargo segments contributed to the increase in revenues with €33.9 million and €7.2 million, respectively.

Recurring operating costs rose to 966.2 million, up 97.4% year-on-year. The company recalls that fuel costs more than tripled year-on-year, to €371.9 million.

“Despite generating a positive effect of €15.9 million, the hedging strategy only managed to marginally reduce the effect of higher jet fuel market prices, which contributed €153.0 million to the increase in fuel cost,” it adds.