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TAP Air Portugal Receives Government Bailout
TAP Air Portugal seems to have found a mechanism to receive a much-needed cash injection to mitigate the effects of the COVID-19 crisis. For this, the European Commission has granted the Portuguese government a €1.2 billion ($1.36 billion) rescue package to be distributed to its flag carrier. Due to TAP’s predeceasing financial difficulties, the European commission was not able to provide assistance to the airline directly as per current EU state aid rules.
The European Union competition chief Margrethe Vestager said: “This €1.2 billion Portuguese rescue aid will help TAP Air Portugal face its liquidity needs and pave the way for its restructuring to ensure its long-term viability. In a sector that has been hit particularly hard by the coronavirus outbreak, the measure will help avoiding disruptions for passengers. With the progressive lifting of travel restrictions and the upcoming touristic season, it also indirectly benefits the Portuguese tourism sector and economy as a whole. We continue working closely with Member States to find solutions to support companies in these difficult times in line with EU rules.”
In this way, the Lisbon-based carrier has agreed to pay the loan in six months’ time or otherwise submit a major restructuring plan that will ensure the long-term sustainability of the airline. TAP had asked for government support in April, where it had asked the Portuguese government for support, alleging this was the most fragile the airline had been since it was founded.
TAP was partially privatized in 2015, where David Neelman took a 45% stake in the airline. Since then, the carrier has undergone a significant modernization process that seeks to make the airline more modern, agile and be positioned as a carrier of choice for passengers crossing the Atlantic from North America and feeding them to different European destinations through its Lisbon hub. In this way, TAP has invested heavily in expanding and modernizing its fleet, with orders for 71 new aircraft including brand new A330-900s and A321LRs. Today, 75 out of the 86 aircraft operated by the airline are on storage, according to FlightGlobal.
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