TAP’s results fall short of its peers before privatisation
Stagnating revenues and a sharp drop in profits have given TAP a worse year than the companies that want to buy it. Profitability remains an asset.
2024 brought more passengers and revenue to Europe’s largest airlines, but was less profitable, with the exception of the IAG Group, which stands out in all indicators. TAP didn’t escape the trend and this time had worse figures than the groups that want to buy it in the privatisation.
Tourism continued to grow last year, helping to push the European aviation industry’s revenues to new records, albeit at a more restrained rate of growth. Lufthansa had the highest turnover, but the biggest increase belonged to the IAG Group, which owns airlines such as British Airways, Iberia and Aer Lingus. With a variation of just 0.7%, TAP saw the least growth.
TAP recorded lower revenue growth
Profits tell a different story. Apart from the IAG Group, whose net profit rose 2.9% to 2,732 million euros, the shareholders of the other companies have no reason to smile.
The losses recorded by Lufthansa, Air France – KLM and TAP have similar and different causes. The German group attributes the drop to the impact of the strikes in the airlines during the first quarter, the reduction in revenue per seat-kilometre flown due to the growth in capacity in the market, the high costs of flight delays and cancellations or the delay in the delivery of new aircraft.
Air France – KLM’s accounts were penalised by the negative impact of the Paris Olympics of 250 million, while TAP’s results were affected by provisions for labour costs and high currency losses.
TAP had the biggest drop in profits
Equally important when comparing the operations of the various companies are two operational indicators that are widely used in the aviation industry: revenue per seat-kilometre (RASK) and operating costs per seat-kilometre (CASK), which measure performance in relation to installed capacity.
The data for 2024 shows that the group that owns British Airways and Iberia generated the most revenue per seat-kilometre, with a positive evolution of 3.1% to 9.52 cents. At the other end of the spectrum is TAP, with 7.13 cents, down 2.3% year-on-year.
The Portuguese airline’s figures also reflect a lower load factor than its peers. The so-called load factor was 82.3%, below the 83.15 of its German competitor, the 86.5% of the IAG Group and the 87.8% of Air France – KLM.
The highest costs per seat-kilometre are at Lufthansa, 9.1 cents, followed by Air France – KLM, with TAP having the lowest costs, even achieving a 1% reduction in 2024. The rest of the airlines have seen this indicator worsen.
TAP has the lowest revenue per kilometre flown
TAP maintains one of the best rates of recurring profitability, with an operating margin of 9% and an EBITDA margin of 20.6%, despite both falling. The Portuguese airline is second only to the IAG Group. Lufthansa was the worst performer in this regard, at 4.4% and 10.6% respectively.
Only IAG beats TAP’s profitability
The Portuguese airline, whose business accounts for between 11 and 14% of peers, also has much less liquidity available on its balance sheet. With 652 million cash on hand at the end of December (17.4% less than in 2023), TAP is a long way from the 9.4 billion of the Franco-Dutch group, the 11 billion of the German group and the 13.36 billion of IAG.
The airline led by Luís Rodrigues also continues to be the most financially leveraged, with net debt equivalent to 2.2 times EBITDA, although in recent years it has come very close to the others. The strongest balance sheet belongs to the owner of British Airways and Iberia, whose debt is almost equal to annual EBITDA.
Portuguese company has the highest financial leverage
With growing impairments and high exchange losses, TAP’s 2024 results are not the best calling card for privatisation. Last year’s accounts also show that, among those interested in the Portuguese airline, the IAG Group is the one with the best financial results.
