Carlos Tavares, a member of the consortium that bid for the privatisation of Azores Airlines, says the company is only not bankrupt because it is state-owned.
Carlos Tavares, former CEO of the Stellantis automotive group and one of the members of the consortium that unsuccessfully bid for the privatisation of Azores Airlines, says that the process conducted by SATA and the tender jury “did not respect the legal principles of the rule of law” and that he will appeal to the Portuguese and European courts. “We cannot accept the way this is being handled, because it does not honour Portugal and it does not honour the Azores”, he said in an interview with ECO. Despite the negative outcome, he insists he has no regrets and adds that only “fools” would agree to buy the company given the contingencies that have been identified.
The Atlantic Conect Group, which also includes entrepreneurs Tiago Raiano, Nuno Pereira and Paulo Pereira, saw its bid to acquire 85% of Azores Airlines for €17 million rejected by SATA’s management, which followed the negative recommendation of the jury of the public tender led by economist Augusto Mateus. The consortium was the only competitor.
Carlos Tavares takes a very critical view of the privatisation of the company responsible for connections between the archipelago, the mainland and Madeira, and international destinations. “We are here in a situation of legal amateurism, of lack of legal certainty, which is not acceptable in a state governed by the rule of law”, he stresses. And he points out what he considers to be examples of “great legal fragility” in the jury’s preliminary report.
“The company, with all its limitations, has been making losses of between €40 and €70 million. These losses are all paid for with Portuguese citizens’ taxes”, he says. “The jury says in its preliminary report that it is not in the public interest to put an end to this waste of Portuguese taxpayers’ money. As if the country had no other needs than to continue burning between €40 and €70 million”, he adds.
Another point that Carlos Tavares criticises concerns the assessment of the consortium’s suitability. The jury had already raised doubts in its report on the first proposal, put forward in 2023, even before the former CEO of Stellantis joined the process, together with businessman Paulo Pereira, owner of Quinta da Pacheca. The manager reinforced the group in March last year, a decision he explains with the “need to strengthen the team and financial availability” after SATA tripled the sale price of the airline.
“The consortium receives authorisation to be reinforced with Paulo Pereira, well known for his tourism ventures and success in wine sales, and Carlos Tavares, who has already made his mark throughout his career at the helm of several car companies around the world”, he begins. “When this reinforcement of the consortium is made, the jury says that the subjective score for the consortium’s suitability is lower than in the first proposal. Now, how can one have confidence in a jury that says such a thing?”
Carlos Tavares points to a third example: the agreement between the consortium and the workers, approved by the unions and crew, but not by the ground staff, was not valued. The Atlantic Connect Group held meetings with the workers’ representatives, which the manager describes as “excellent and mutually respectful”. “The proposals we made for employees to contribute to correcting the trajectory and addressing the problem received an extremely mature response, with a great deal of common sense and a great show of affection for the company they work for”, says the manager, pointing out that they received the support of 75% of pilots and 52% of crew members.
“This obviously required a lot of work on our part for some time, and this social component is one that the jury does not include in its assessment”, he criticises. “We can demonstrate, line by line, word by word, what is a succession of errors, to say the least. And, from there, there was not even a confrontation of these errors, this false information, with our position and our proposal”, he adds.
Azores Airlines with only an “empty backpack”
In the note on the preliminary report, which it distributed through SATA, the jury considers that the Altantic Connect Group’s proposal “does not meet the requirements defined in the procedure, does not comply with previously established conditions and obligations, and does not safeguard the financial interests of SATA Holding and, consequently, of the Autonomous Region of the Azores”.
It also states that “SATA Holding would have to fully assume the capitalisation of Azores Airlines” and that the proposal “in practice, does not provide for any financial reinforcement of the company by the consortium, with the economic risk of the operation remaining essentially on the side of SATA”.
Faced with the jury’s assessment, Carlos Tavares begins by explaining that the company “has no assets. It has no aeroplanes, all aeroplanes are leased, and it has no real estate assets, everything that is used is rented”. It is also highly dependent on multi-year contracts with third parties, particularly for the use of aircraft. “When multi-year contracts are signed and are part of the problem, the termination of those contracts is the responsibility of those who negotiated them poorly and signed them”, he argues.
“Why would the consortium take on the bad decisions made by the previous, clearly incompetent management and take the financial risk of executing multi-year contracts that are bad for the company’s sustainability? As we know, the company is bankrupt. The only reason it did not go bankrupt is because it is a state-owned company”, he questions.
The manager refuses to disclose the financial liabilities calculated in the audit carried out on Azores Airlines, for reasons of confidentiality. “If you want a buyer to manage the company properly, you have to give them the opportunity to do so with a clean slate. Since the company was not placed in bankruptcy, as it should have been, don’t ask private investors to take on the burden of your bad decisions and do so with a smile”, he replies.
Appealing to Portuguese and European courts
The consortium issued a statement this week saying that “there was no real intention to complete the process” on the part of SATA. ECO asked Carlos Tavares when they came to this conclusion. “When we read the 140 pages of the preliminary report, which showed that those arguments cannot be accepted in good faith and are distorting the reality of the facts”, he points out. “Then we had the feeling that everything was being constructed to, in a way, justify a decision that was going to be made for reasons I don’t know, but obviously it was being constructed to justify something”, he added.
On Monday, the consortium had not yet been notified of the final decision, but last Friday, the board of directors of SATA Holding approved a proposal to the regional government to close the privatisation process without awarding the contract, considering that the jury’s conclusions “demonstrate prudence and responsibility in a process of high relevance to immediate economic viability” and to the “medium and long-term stability of Azores Airlines and the protection of workers and the public interest”. The final decision of the Azorean Executive may go to the Government Council this Wednesday.
On Monday, the consortium had not yet been notified of the final decision, but last Friday, the board of directors of SATA Holding approved a proposal to the regional government to close the privatisation process without awarding the contract, considering that the jury’s conclusions “demonstrate prudence and responsibility in a process of high relevance to immediate economic viability” and to the “medium and long-term stability of Azores Airlines and the protection of workers and the public interest”. The final decision of the Azorean Executive may go to the Government Council this Wednesday.
Carlos Tavares says the consortium will now appeal to the European authorities — “the European Union, which imposed this, has to be concerned [with] how this process is being managed” — and take the matter to court. “We cannot accept that false arguments are presented as acceptable. We will use the Portuguese courts and foreign courts, particularly European ones. The rigour of a state tender must be respected. This cannot remain as it is, for all reasons, not only in the interest of the consortium, but also for the sake of the country’s integrity and respect for the rule of law”, he declares. “This cannot be left as it is and it cannot be forgotten.”
Only “fools” would go ahead with a direct sale without considering the problems encountered
On SATA’s part, the next step will be to move forward with a direct sale – the plan B advocated by the Regional Government – which must be completed by the end of the year, the new deadline agreed with the European Commission to finalise the privatisation. Tiago Santos, the president of the Azorean company, said last Wednesday on Antena 1 Açores radio that the direct sale model “is in the final stages of definition”.
Carlos Tavares states that “you cannot carry out a second sale process without closing the first one”. And he leaves the question: “Any entity that wants to buy the company in a direct sale, do you think it will ignore everything we have discovered? Do you think you will find fools who will ignore all the problems we have encountered? I don’t think so”.
“If the company closes, and that may be one of the possibilities, the jury’s responsibility in issuing a negative judgement based on false arguments is incredibly serious”, the manager adds.
“I have no regrets whatsoever”
When asked about the costs Atlantic Connect has already incurred in the process, Carlos Tavares refuses, for now, to quantify them, but says they are “significant”, between the audit that was carried out on the company’s financial statements and the teams of lawyers. “It was a lot of time spent by people who could have invested that time in other businesses, such as Paulo Pereira, Tiago Raiano and myself.”
Despite the negative outcome, the engineer who was CEO of automotive giant Stellantis until 1 December 2024 says he does not regret joining the consortium. “I have no regrets. I have met some wonderful people”, he replies.
“It was an intense year, in which I had time. I used that time to study and work with financial advisers, to understand this industry, to discuss with workers and trade unions. We have an excellent team spirit within the consortium. We have a good team, made up of people with brains, common sense and extensive business experience”, he replies.
The indignation, however, does not disappear. “As a Portuguese citizen, I cannot accept that a jury, which is a respected entity in this process, can issue opinions as wrong as the ones it has issued. This does not open the door to a calm, thoughtful and mature functioning of our society. I and the other investors cannot accept the way this is being handled, because it does not honour Portugal and it does not honour the Azores.”