Business

The latest news on the TAP Air Portugal restructuring process

Image: Aero Ikarus from Zurich, Switzerland / CC BY-SA via Wikimedia

TAP Air Portugal has had difficult times but has just taken an important step in the restructuring process that should determine the survival of the company.

Deutsche Bank

The company recently decided that Deutsche Bank, Germany’s largest investment bank, will be the financial advisor to the restructuring plan negotiated with the European Commission. The definition of this support was a requirement by the agency to move the issue forward. One of the tasks of Deutsche Bank will be to conduct a market analysis and to prove that the restructured TAP can pay off the debt with its own income or can find a possible partner.

money

On June 10th, the European Commission approved emergency aid for TAP with a loan of up to 1.2 billion euros. However, the EU asked for the restructuring plan to be presented.

The deadline for finalizing the restructuring plan is nearing its end. In an interview with the Portuguese website, PressTur, which specializes in tourism, Portuguese Secretary of State Miguel Cruz said in an interview with the Portuguese Ministry of Finance last week that he intended to finalize the plan by the end of November before the limit set by the European Commission of December 10th.

On top of all this process and amount, the Portuguese government announced last week that it had reserved a loan guarantee of € 500 million for the airline in its 2021 budget, on top of the € 1.2 billion previously approved.

Lower TAP

The restructuring of the company also includes reducing the fleet and adapting the flight network. “The latest forecasts point to a recovery to the level that was recorded in the prepandemic of 2019 between 2024 and 2025,” emphasized Cruz. According to Jornal Econômico from Portugal, the company recorded a loss of 582 million euros in the first half of the year.

The secretary noted in the report that the financial restructuring and strategic adjustment of TAP “depends on many variables, but primarily on the development of the pandemic”. The restructuring plan also requires negotiations to cut staff that have not yet started with the unions.

The Portuguese Minister of Infrastructure and Housing, Pedro Nuno Santos, said in an interview with the Portuguese newspaper Publituris on October 15 that around 1,600 employees should leave the TAP group by the end of 2020 to leave the leanest company. “We cannot artificially maintain a dimension that is unsupported in the market in which we operate today,” he said. Of these, 1,200 would have left the company by the end of September and 400 more left.

The company had 14,000 skilled workers in the pre-pandemic period, two thousand of whom are pilots. This group, according to the Portuguese press, is perhaps the most resistant to a profit-loss agreement with management. TAP had more than 100 aircraft and operated for more than 80 destinations worldwide in 2019.

Back to top button