By Diogo Monteiro
There is one more card at play regarding the Portuguese flag carrier, TAP Air Portugal.
In the middle of a restructuring plan (which has not yet been approved by the European Commission), TAP Air Portugal is being much scrutinized by the Portuguese society and media due to the high investment of Portuguese taxpayers, there are now more possible interested parties regarding the possible privatization of TAP after this plan is completed and approved by the European Commission.
Turkish Airlines, based in Istanbul, and a member of the Star Alliance, to which TAP also belongs, informally submitted through the Turkish State by diplomatic channels a proposal of up to 1.9 billion Euros for the purchase of a majority position in the Portuguese airline.
Turkish Airlines, which is 49% owned by the Government of Ankara, flies to 331 destinations with a diverse fleet including the widebodies Boeing 787 Dreamliner and Airbus A350, enter thus in a possible dispute for the majority of TAP’s capital, since the German airline Lufthansa have already expressed (also informally) interest in the (now majority) capital of the Portuguese airline, as Lufthansa have already paid all the financial obligations who contracted with the German State due to the COVID-19 pandemic.
The central issue for the advancement of this presupposed business will be the result of the Portuguese legislative elections, scheduled for January 2022, as a result of the lead in the state budget document by the Portuguese Parliament, which led to a tide of uncertainty and political instability in Portugal.
The Government of Portugal, whose Prime Minister is the socialist António Costa, maintains majority control of the airline and the Prime Minister himself defends that the Portuguese State should maintain majority control of the airline, stating that TAP it is a national asset, however Turkish Airlines, according to the Portuguese newspaper “Negócios”, is only interested in a majority position. As António Costa is again candidate for Prime Minister in 2022, the game may or may not change, and once again, the election result will be effectively decisive for a possible choice of Turkish Airlines.
Another tool that could boost (or not) this possible deal between Lisbon and Istanbul is the airline’s restructuring plan itself. In the worst-case scenario, this forecasts an injection of 3,700 million euros into the airline.
The European Commission maintains a close and continuous dialogue with the Government of Portugal and TAP itself so that the lines of communication and business are not closed. There is still no official decision by Brussels, but sources close to the Government admit that Brussels will dictate a favorable partnership for the restructuring plan by the end of the year.
TAP Air Portugal recently posted losses of 627.6 million Euros in the 3rd quarter of 2021 (a reduction of 10.4% compared to the same period in 2020). These results are also due to exchange differences, the weak demand for flights, the increase in fuel prices and the still severe restrictions in several countries due to the SARS-CoV-2 virus. The revenues from the opening of the North American and Latin American markets do not yet enter these accounts, where TAP is gradually reintroducing its flights, many of which, are already sold out in Business Class until New Year’s Eve, guarantees TAP’s CEO Christine Ourmières -Widener