2023-09-28 18:43:20
The privatization of the Portuguese airline TAP begins. The Government of socialist António Costa approved today, Thursday, a decree law that allows the reprivatisation of “at least 51%” of the company, under state control, to begin, and that reserves “up to 5%” to the workers.
The specifications with the specific guidelines for the operation will be published at the end of this year or the beginning of 2024, as explained by the Portuguese Minister of Finance, Fernando Medina, in a press conference after the Council of Ministers, according to Efe. Medina has explained, in any case, that the Portuguese Government is looking for a large-scale investor in the airline sector or a consortium led by him, without specifying the final percentage that will be reprivatized or the value to proceed with said sale, which will depend on the compliance with “strategic objectives” set by the socialist Executive. “It is not yet defined whether 51%, 60%, 70% or 80% will be privatized or, as the prime minister already admitted, up to 100%. It is not defined,” stressed Medina, who clarified that they are not seeking groups of investors who enter TAP and then sell it in whole or in parts, removing “strategic contribution to the country.”
The Council of Ministers has set the central objectives of this privatization as the growth of TAP, guaranteeing “high-value” investment and employment in the aviation sector and promoting national airports, especially Porto, among others.
Interests of IAG
Among those interested in the Portuguese company is IAG, the holding company in which the Spanish companies Iberia and Vueling are integrated. At first, IAG stated that it had no interest in TAP and that it was focused on closing the purchase of Air Europa, an operation that is now pending authorization from the Competition authorities of the European Commission after the agreement to sell 500 million reached in February of last year. However, last May, the president of IAG, Luis Gallego, assured that they would analyze the TAP sale process to see if it would fit into their project.
The incorporation of the Portuguese airline into the Spanish-British group would make all the sense in the world in the eyes of one of its main competitors, Ryanair. «TAP seems the perfect complement to IAG. Iberia is very strong in Latin America and TAP is very strong in the long-haul to Brazil, so it seems like the perfect complement. If TAP ended up in the hands of Lufthansa or Air France-KLM, what it would do would be divert many flights to Frankfurt or Paris. What makes the most sense is for it to stay in the Iberian Peninsula,” its CEO, Eddie Wilson, explained to this newspaper a couple of months ago.
From Portugal they are not so clear, however, that the integration of their airline into IAG is such a good idea. Last February, Economy Supply, António Costa Silva, assured that “it does not seem like a good solution” due to the proximity of the Madrid and Lisbon hubs. The Portuguese fear is that, after the operation, the Lisbon airport would lose frequencies and its connectivity would weaken.
Among those interested would also be the other two large European groups, Air France-KLM and Lufthansa. The German company, however, is now digesting the acquisition of the Italian company ITA, which emerged from the ashes of the former Alitalia, an operation that is also being analyzed by European authorities.
State aid
TAP is now under the tutelage of the Portuguese State after its Executive, to mitigate the effects of the pandemic, expanded its presence in the company’s capital and approved million-dollar aid, considering it “strategic” for the country. In total, the European Commission gave the green light to different state aid of around 3.2 billion euros, in exchange for a restructuring plan, which has given the Portuguese State ownership of 100% of the airline’s capital. Likewise, Portugal owns 72.5% of the TAP group, which includes the engineering and maintenance business in Brazil – which will close this year -, stakes in ground handling and catering companies, and the regional airline Portugália.
The Portuguese airline recently came out of losses by closing the first half of 2023 with a profit of 22.9 million euros, compared to the 202.1 million lost in the same period of the previous year; while it closed 2022 with a profit – for the first time in five years – of 65.6 million.
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