The economic pandemonium caused by the coronavirus pandemic has seen flagship airline TAP – already having posted huge financial losses in 2018 and 2019 – request State help in the form of lay-off for 90% of its staff.
The news has seen the government quizzed over TAP’s immediate future. Economy minister Pedro Siza Vieira admits: “We’re ready to nationalise if necessary”.
For now, the announcement made by the company this week will see 9000 members of staff – from pilots to cabin crew – ‘laid off’ on two-thirds of their pay for a period of 30 days ‘which could be extended’.
Around 1000 employees will be kept on to work reduced timetables under the same conditions, receiving no more than 80% of their salaries.
TAP’s operations, which used to run at 3000 flights per week, are down to just five: three to the Azores and two to Madeira.
No-one knows where the crisis is going, but for an airline that posted eye-watering losses for the last two years, the future is most definitely looking bleak.
Talking to TSF radio on Tuesday, Pedro Siza Vieira admitted that the government “will not fail to use all the powers at its disposal to safeguard TAP’s strategic position”. What this means, he explained further was that “the State has the tools to nationalise and will use them if it sees fit”.
As TSF explains, for TAP the pandemic has simply ‘aggravated a long crisis’. The airline is a company “with highs and lows that returned to State hands under the government of António Costa after privatisation in 2015. In 2017 the State returned to an ownership of 50% of capital, with Atlantic Gateway responsible for 45% and the rest of the company shares held by employees.”
The plan at the time was to see the airline whose initials had been parodied for ‘Take Another Plane’ ‘capitalised and modernised’. But the ensuing years “did not correspond with the government’s expectations”, says TSF with great diplomacy.
In 2018 TAP registered losses of €118 million. In 2019, came another dip of €105.6 million. Bizarrely, there was even a failed attempt by the company to pay bosses ‘bonuses’. This led to management becoming even less popular.
Recently came news that the airline has been seeking new shareholders in the form of Lufthansa and possibly United Airlines (click here).
The only certainty is that TAP, like every other airline company in the world, is in big trouble.
