Proposed audit court change eases path for TAP sale

A proposed change to Portugal’s audit court law would take TAP out of the scope of prior approval for contracts, removing a hurdle in the airline’s privatisation process. ECO has learned that bidders see the requirement as a constraint on management flexibility after the sale.

Under the bill now in parliament, state-owned corporate entities operating in internationally competitive markets would no longer fall under the jurisdiction and financial control of the Tribunal de Contas, Portugal’s audit court, if they have a majority private shareholder or, with a minority private shareholder, grant management rights through a shareholder agreement or company bylaws.

That second case fits the structure planned for TAP after privatisation. The government intends to sell 49.9% of the airline to private investors, including 5% earmarked for employees, while management would be handed to the new shareholder under a shareholder agreement, according to the decree-law governing the operation.

The government last week approved a resolution selecting Air France-KLM and Lufthansa to submit binding offers and instructed Parpública to send invitation letters to both groups. From receipt of those letters, the bidders will have 90 days to present their offers, although that deadline may be adjusted by the infrastructure and housing ministers.

If parliament approves the legal change, one of the main concerns raised by candidates in the sale process would be removed. ECO also reported that the privatisation still faces other uncertainties, including Ryanair’s legal challenge over pandemic state aid to TAP and turbulence in the aviation sector linked to higher jet fuel prices.

Originally published at Eco.pt