TAP pilots dig-in over strike that “could destroy debt-laden national airline”

Despite impassioned pleas for a change of heart, TAP-Air Portugal pilots have embarked on the strike that the government and unions have warned could lead to complete disaster.

Appealing for change of heart on national television yesterday, deputy prime minister Paulo Portas said: “I am asking the pilots: think of your country, think of tourism, think of the economy, think of your company”.

“TAP is a very important brand for Portugal. Don’t contribute to its destruction. Don’t carry out a 10-day strike in one month, which would destroy the coffers of any company”.

But the political posturing fell on stony ground. Despite an 11th hour meeting that went on late into the evening, the strike that threatens to put the beleaguered airline a further €70 million into debt, and create overall losses to the economy “of more than €300 million” began at midnight last night, causing cancellations up and down the country.

“Faced with the government’s intransigence, we have no option (but to strike)”, Hélder Santinhos, the head of the pilots union SPAC, told journalists.

The stoppage which newspapers estimate will put more than 2,700 flights at risk, affecting 300,00 passengers, is to end days before the May 15 deadline for investors to submit binding offers for TAP in the government’s second attempt to sell-off the airline in two years.

Pilots’ beef lies with “broken government promises” which they claim assured them of a 10-20 percent share in TAP capital in any privatisation deal.

The actual offer now is only five per cent. And pilots say the government has also reneged on previous agreements over payment of seniority bonuses frozen since 2011.

But SPAC is very much on its own in the furore. Other TAP workers “have demonstrated against the stoppage”, writes Peter Wise of the Financial Times – while Carlos Silva, head of the UGT trade union federation, called the strike “ a step towards the abyss and the destruction of the company”.

For now, it is a waiting game.

As Transport secretary Sérgio Monteiro told reporters, the government will stick to the privatisation process and wait for bids.

Proposals “may be better, worse or there will be none at all, depending on what happens in the next 10 days”.

He added: “If the strike has the estimated impact, TAP will not be the same on May 16”.

Meantime, news of interested parties leaving the bidding table has been rife.

For now, all that is certain is that Portuguese businessman Miguel País do Amaral is still in the running with a joint-bid with American airline mogul Frank Lorenzo.

Amaral publicly announced his interest during another black moment in TAP’s recent past last summer (see: https://www.portugalresident.com/tap-in-crisis-as-portuguese-entrepreneur-announces-multi-million-purchase-bid).

Also in the running could be Azul airlines run by Brazilian entrepreneur David Neeleman 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.

Companies understood to have withdrawn their interest earlier this month were Air Europa, the carrier owned by Spanish group Globalia, and Colombian airline Avianca held by multi-millionaire businessman German Efromovich whose first bid for TAP failed in the initial aborted privatisation process.

As the FT explains: “Portugal agreed with its international bailout lenders to sell off TAP as part of a privatisation programme that has raised €8 billion since 2011, exceeding an initial target of €5.5 billion.

The idea, for now, is that the government sells a 66% in the airline, retaining a 34% stake which can be sold in two years.

As national media has already pointed out, the airline on sale for around €1 billion already has almost exactly this in liabilities. In other words, the government stands to make “zero or almost zero” from privatisation (see: https://www.portugalresident.com/portuguese-government-stands-to-make-%E2%80%9Cnothing%E2%80%9D-from-tap-sale).

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