Azores Airlines privatisation process to begin January 2023

The corporate restructuring of SATA will be completed in early December, and the public tender for the privatisation of Azores Airlines will begin on 1 January 2023, the Azores government announced on Monday.

“I can announce that as of 1 January 2023, we will begin the public tender process to sell Azores Airlines,” said the regional secretary for Finance, Planning and Public Administration, Duarte Freitas.

He was speaking today at the headquarters of the Regional Assembly, in Horta, at the opening of the discussion of the region’s Plan and Budget for 2023.

The privatisation of the majority stake in Azores Airlines/SATA Internacional (the company of the SATA group responsible for flights between the archipelago and abroad) is provided for in the proposal for the Azores Budget for 2023.

Duarte Freitas noted that the draft Budget for 2023 “does not provide for more capital injections” in SATA.

“I can announce that the corporate restructuring of the SATA Group will be completed at the beginning of December, creating a holding company that will make it possible to separate the various companies, isolating SATA Air Açores from pernicious contagions and making it possible to sell Azores Airlines,” he added.

The regional secretary stressed that the sums included in the 2021 plan (€82.5 million) and 2022 plan (€62 million) and budgets were aimed at “saving SATA.

“These were unrepeatable expenditures, so the €641 million provided for in the 2023 Plan have been purged of these amounts which, together with guarantees, served to save SATA from the disaster it was led to in the past,” he said.

The proposal for a regional legislative decree for the Autonomous Region of the Azores Budget for 2023 authorises the “sale of the majority of the region’s indirect stake” in SATA Internacional – Azores Airlines.

The “divestment of a controlling stake (51%) in Azores Airlines” is provided for in the Azorean airline’s restructuring plan approved in June by the European Commission.

The Regional budget for 2023 stipulates that, within the scope of the sale of SATA Internacional, a “special commission must be set up to monitor the respective process, which will end when it ends,” and a “corruption risk prevention plan” must be made.

Through the legislative decree, the regional government (PSD/CDS-PP/PPM) is also “authorised to alienate the stakes it holds in participated entities, except for those in sectors considered strategic for the Autonomous Region of the Azores and of prime necessity for the population”.

In June, the European Commission approved Portuguese state aid to support the restructuring of the Azorean airline of €453.25 million in loans and state guarantees.

The approved sum is divided into direct loans of €144.5 million and debt assumption of €173.8 million, for a total of €318.25 million to be converted into equity, and state guarantees of €135 million granted until 2028 for funding provided by banks and other financial institutions.

SATA’s financial difficulties have persisted since at least 2014 when the airline, wholly owned by the Azores Regional government, began to record losses, aggravated by the effects of the Covid-19 pandemic, which had a huge impact on the aviation sector.

In June 2020, the Azores Government (then led by the PS) announced would abandon the second attempt to privatise Azores Airlines after a first tender was cancelled in November 2018.

In June this year, the regional government president, social democrat José Manuel Bolieiro, confirmed that the European Commission had placed a “requirement” on privatising up to 51% of Azores Airlines’ share capital.