Government not open to selling off 100% of TAP

Portugal’s secretary of state for finance, João Nuno Mendes, said on Friday that the government was not open to the possibility of selling 100% of TAP in the reprivatisation process under preparation, in line with statements made by the prime minister.

“Our understanding is that the government is not open to the possibility of selling the entire company,” said the secretary of state for finance, at the TAP parliamentary committee of inquiry, in response to PSD MP Hugo Patrício Oliveira, on the reprivatisation process being prepared.

João Nuno Mendes recalled that prime minister, António Costa, has publicly stated this orientation of the government, so that the process is conducted with a view to maintaining a strategic stake in the airline.

The “kick-off” for the reprivatisation of TAP was given with the publication of a Cabinet resolution that determines the completion of two independent assessments that must precede the actual start of the process, which will only happen when the decree-law resulting from the government’s conclusions on those assessments are published.

The minister also confirmed that the commitment assumed with the European Commission that allowed for aid to the company “does not require the sale of TAP”.

João Nuno Mendes was also questioned about the measures implemented as part of the restructuring plan, such as redundancies and wage cuts that are still being applied – a process he did not lead – and whether they went beyond what was necessary.

“We have to have the humility to realise that the job is not done, there are several years left of the restructuring plan, this is a marathon,” the minister pointed out, arguing that the company’s recent good results “are not decision factors to change the solvency framework implicit in the restructuring plan”, under penalty of making an interesting decision in the short term, but one that would have to be explained in the event of an economic slowdown, or even another pandemic.

“I trust that the decisions the company took were the best ones at each moment,” he stressed.

In addition, Nuno Mendes pointed out that any alteration to the restructuring plan must be approved by the European Commission.

In relation to proceedings taking place in the European court and that have already led to the cancellation of state aid to German airline Lufthansa, the minister said he was not aware of any proceedings against the Portuguese State, but rather proceedings involving the European Commission.

“We are very confident that this process can be overcome with regard to TAP, because the aid has been granted,” he said.

During the PS questioning, João Nuno Mendes guaranteed that he had no involvement in the process of the departure of former TAP director Alexandra Reis, with a €500,000 compensation to which she was not entitled, and that he only found out about the issue when it became public on 24 December 2022.

On the subject of management contracts with TAP directors, which are mandatory in public companies and which were not signed, João Nuno Mendes confirmed that the issue was raised in the first meeting with the then chairman of the Board of Directors, Manuel Beja, who told him that, according to recent rules, the contracts should be submitted by the directors themselves.

The secretary of state also confirmed that there was a negative opinion from the Directorate General of Treasury and Finance (DGTF) regarding the inclusion of a risk clause in those contracts and that it was awaiting the submission of those contracts by the directors, to be approved by the technical unit for the follow-up and monitoring of the public business sector (UTAM).

The current secretary of state for finance is being heard today at the TAP enquiry committee as former secretary of state for the treasury (March to December 2022) and finance (June 2020 to March 2022).