Azores Airlines privatisation process should be finished by October

  • Lusa
  • 20 January 2023

The privatisation will be carried out through an international public tender, with the obligation to "not make collective redundancies, nor the extinction of jobs" in the company for a period of time.

The Azores regional government wants to conclude negotiations for the privatisation of airline Azores Airlines by October, whose specifications will require the maintenance of jobs and public service obligations, the government announced on Friday.

“Approving the specifications by the end of February, our intention is that by September or October the negotiation process for the sale of Azores Airlines can be concluded,” said the secretary of finance, planning and public administration, Duarte Freitas.

The secretary of state was speaking to journalists in the city of Horta at the presentation of the deliberations of the governing council meeting of the coalition between the PSD/CDS-PP/PPM Parties, which authorised SATA Holding to begin the “sales procedure” for 51% of the share capital of Azores Airlines/SATA Internacional.

The privatisation will be carried out through an international public tender, with the obligation to “not make collective redundancies, nor the extinction of jobs” in the company “for a predefined period,” the government said.

The acquirer is also required to submit a proposal to “any public tender regarding scheduled air services on non-liberalised routes between the mainland and the Azores” and between the Azores and Madeira or to “maintain the proposal” previously submitted by Azores Airlines for those routes (Lisbon-Santa Maria-Lisbon, Lisbon-Pico-Lisbon, Lisbon-Horta-Lisbon and Funchal-Ponta Delgada-Funchal).

The specifications will also require the maintenance of Lisbon and Porto routes with the islands of Sao Miguel and Terceira and the connection to the Azorean diaspora in North America, as well as maintaining the company’s headquarters in the Azores “for a predefined period”.

“The specifications, which will be developed from this resolution and which we hope to approve in the governing council at the end of February, will define in more detail the lines of the sale process,” said Duarte Freitas.

The regional secretary said that if it were not for the current regional government, SATA “could be closed right now”, criticising the “terrible legacy” left by previous PS (Socialist Party) executives.

“With this decision, in addition to saving SATA Air Açores, we will try to save the business conditions of Azores Airlines as much as possible, because if we cannot put in more money from the region and the company continues to make losses, it would end up closing,” he added.

He added: “There is a very fine line, because we have to defend the company as much as possible, but we cannot run the risk of having an unsuccessful sale process.

In June, the European Commission approved Portuguese state aid to support the airline’s restructuring of €453.25 million in loans and state guarantees, providing ‘remedies’ such as a reorganisation of the corporate structure.

The financial injection involves the divestment of a controlling stake (51%) in Azores Airlines, the split of ground handling activity and a reorganisation of SATA’s corporate structure, with the creation of a ‘holding’ replacing SATA Air Açores in the control of its subsidiary operations.

It also provides for an obligation on SATA to have a ceiling on its fleet until the end of the restructuring plan and a ban, also until that deadline, on making any aircraft acquisitions.

Azores Airlines operates to and from outside the archipelago, while SATA Air Açores operates inter-island routes.