As national media points to TAP facing a further €70 million losses due to pilots’ decision for 10-day strike in May, two key bidders in the privatisation process have pulled out.
Air Europa, the carrier owned by Spanish group Globalia, and Colombian airline Avianca held by multi-millionaire businessman German Efromovich have both withdrawn their interest for similar reasons as the airline’s financial situation lurches from desperate to catastrophic.
Globalia president Juan José Hidalgo referred to the “impossibility to run TAP with private criteria”, and Efromovich – who had tried to secure the airline in a failed bid in 2012 – cited the “desperate financial situation”.
Left at the negotiating table now are Azul airlines, run by Brazilian entrepreneur David Neeleman, the gung-ho duo of Miguel Pais do Amaral teamed with feared US airline “union basher” Frank Lorenzo and three US equity funds, including Apollo Global Management – the business that snapped up Tranquilidade insurance company for an alleged quarter of what it was worth after the collapse of BES last year.
The inference is loud and clear. Whoever buys TAP now will do so at even more ‘favourable terms’ than was possible pre-strike declaration.
Already staggering with losses last year of €85.1 million, the pilots’ announcement for a 10-day strike between May 1-10 could almost double damages, writes Diário de Notícias under the headline “TAP risks losses of €70 million with pilots’ strike”.
Público too affirms that the government is now in a “very delicate position”.
“On the one hand, it must defend TAP from the impacts of this kind of strike, and allow the sale to go ahead as planned.
“On the other, there is no margin to satisfy pilots’ demands.”
As national media has explained at length, the announcement by pilots’ union SPAC follows what it calls the “irremediable impasse” reached with both the government and TAP management.
Citing agreements made both in 1999 and last winter (when last-minute negotiations headed off a Christmas pilots’ strike), pilots claim they were promised a 10%-20% share in the capital of the airline when it was ‘privatised’.
In a communiqué delivered after the stormy meeting in Lisbon yesterday, the union itemised 30 points “which leave no way open for dialogue with the government or TAP’s administration”.
TAP’s CEO Fernando Pinto has called the demands a “resuscitation of pretensions”.
Pinto had already appealed to pilots in a letter covered in the press where he highlighted what he called their “incomprehensible accusations” and said a strike would be “disastrous for the credibility” of the airline.
The furore is certainly playing into the hands of equity funds which delight in buying up distressed businesses as other buyers run for the hills.
Meantime, all eyes are on whether Portuguese Prime Minister Passos Coelho will ask for a “civil requisition” to effectively outlaw the strike.
Further confusion has been created by the fact that the pilots have called their action to coincide with the stepping down on May 1 of the president of the Conselho Económico e Social.
Without a replacement for Silva Penedo, the “tribunal arbitral” (arbitral court) that could define minimum services for a strike could be incapable of intervening, writes Correio da Manhã.
As it is, the strike has been scheduled to end five days before the deadline for “interested parties” in the privatisation process to submit their final proposals.
For a government that is being assailed from all sides by bad news in an election year, this latest blow could hardly come at a worse time.
By NATASHA DONN [email protected]