TAP is no longer ‘technically bankrupt’

TAP reached positive equity last year, emerging from a situation of technical bankruptcy in which it had been since 2020, according to what ECO found out. This is an essential step towards re-financing itself on the market, which should occur this month.

The airline’s net worth was already fragile before the pandemic, with equity of just over €100 million in 2018 and 2019. With covid-19 and the paralysis of air traffic, losses have soared, pushing the company into a “technical bankruptcy”.

At the end of 2020, the hole in the company’s net worth was 1,154.3 billion, remaining almost the same at the end of June 2021, despite an injection of 462 million made a month earlier by the state.

The airline lived on these terms until the end of 2021, when the executive went ahead with a second operation, of unprecedented value: €1,794.5 million, most of it through a loan conversion into capital and the other through a classic capital injection from the Treasury.

Despite the company’s losses of €627 million recorded in the first nine months of 2021 (the most recent figures from TAP), a source with knowledge of the process told ECO that the Portuguese airline closed last year with a positive net worth, although it could not give further details of the exact amount.

Getting out of a ‘technical bankruptcy’ situation was important for the airline to move forward with €360 million in private funding at the beginning of 2022, as announced after the European Commission approved the restructuring plan.

According to ECO, the intention is to complete this operation by the end of the month and before the legislative elections, and the executive has contacted several banks for this purpose. The loan will be 90% guaranteed by the state.

This financing will have a short maturity period of around one year. The recovery plan foresees that it will be repaid with the money from a new capital injection into the airline.