Due to the health crisis, many European governments are flying to the aid of airlines to avoid the bankruptcy of the largest groups, such as Lufthansa and Air France. The Portuguese executive announced on Thursday July 2, the renationalization of the airline TAP.
To prevent it from succumbing to the crisis caused by the coronavirus pandemic, the government will invest 55 million euros to increase its share in the capital of TAP from 50% to 72.5%, announced in conference of press finance minister Joao Leao, quoted by the TSF television channel on his website.
“TAP’s activity has enormous strategic importance for the country”, stressed the minister still according to TSF, explaining that the government had intervened “To avoid the collapse of the business“.
After long negotiations with private shareholders, the government has reached this agreement which allows the main private shareholder, the American David Neeleman to withdraw. His Portuguese partner Humberto Pedrosa will hold 22.5% of the shares and the group’s employees will keep their 5%.
Group CEO Antonoaldo Neves, appointed by David Neeleman, to be replaced ” at once “, added Minister of Infrastructure Pedro Nuno Santos, quoted by the Portuguese agency LUSA. But he has not announced a successor.
An essential role in the tourism sector
Privatized up to 61% in 2015, TAP had seen the Portuguese State go up to 50% of the capital in 2016. The Atlantic Gateway consortium of MM. Neeleman and Pedrosa owned a 45% interest.
The airline plays an essential role in the tourism sector, one of the engines of the Portuguese economy. “Almost 90% of our tourists arrive by plane, half by TAP”, Mr. Santos reminded Tuesday, stressing that “It would be an economic disaster to lose it”.
The government had offered shareholders a loan of up to 1.2 billion euros to bail out the group but its conditions had been rejected by the board of directors, according to the Minister of Infrastructure.
The containments imposed to fight the Covid-19 pandemic grounded the airlines. They could suffer more than $ 84 billion in net losses in their fiscal year 2020, and more than $ 15 billion still in 2021, from the consequences of the coronavirus pandemic, according to the International Air Transport Association (Iata).