Government approves the sale of 49.9% of TAP’s capital

The government has approved the process of privatising TAP with up to 49.9% of the company’s capital, announced the Prime Minister, Luís Montenegro, adding that the decision “incorporates the opening up of the capital for one investor or more up to 44.9% and 5% to employees”. The government leader also guaranteed that the process safeguards the Lisbon hub and that if the government’s objectives are not met, the process can be suspended without any compensation.

Luís Montenegro interrupted the Council of Ministers meeting that took place this Thursday to inform that the Executive had approved a decree-law to approve the reprivatisation of 49.9% of TAP’s share capital. This is the “first step in the process of reprivatising TAP”.

“We are convinced that there will be many interested parties and that we will have the opportunity to evaluate the proposals that will be presented from a financial, technical and strategic point of view”, said the Prime Minister.

However, Montenegro emphasised that “if the objectives set by the government are not achieved”, the law “incorporates the possibility of suspending or frustrating” the operation “at any time, without any compensation consequences for the respective interested parties”.

“This is an objective that we believe will ensure that our airline safeguards the hub in Lisbon, safeguards the use of all the country’s airport infrastructures, in particular Humberto Delgado Airport today and Luís de Camões Airport tomorrow”, explained the head of government, adding that all the details of the plan will be presented by the ministers of Infrastructure, Miguel Pinto Luz, and Finance, Joaquim Miranda Sarmento, at 5pm.

According to Montenegro, the government’s concern is to value “the mobility capacity of the Portuguese, economic development, the competitiveness of the economy and the projection of the country around the world, safeguarding the most strategic routes”.

The Prime Minister also guaranteed that the aim of this process is to ensure that TAP is a company that is “profitable, well managed and within a context of being competitive, financially sustainable and at the service of the country’s strategic interests”. “We are taking this decision with the future and the country’s development in mind. We’ve already spent a lot of money that hasn’t had any impact on the lives of the Portuguese. We don’t want to keep pouring money into a bottomless pit”, he concluded.

The announcement of the kick-off of the sale of TAP comes after the Finance Minister had already given some clues about the process. In an interview with Bloomberg, Miranda Sarmento said that the government intended to go ahead with the process “in the next few weeks”, and several aviation groups have already expressed an interest in buying the Portuguese company, including IAG, Air France-KLM and Lufthansa.

In a first reaction to the government’s announcement, the PS considered the solution of privatising 49.9% of TAP “adequate”, but demanded “two conditions”: the reimbursement of the three billion euros that the state invested in the company during the Covid-19 pandemic and the maintenance of the majority of the share capital in the state, according to the socialist secretary-general, José Luís Carneiro, from the party’s headquarters in Largo do Rato, Lisbon.