… in spite of extra revenue/ passengers
Portugal’s flagship carrier TAP, has announced losses of almost €1.6 billion for 2021, in spite of an increase in the number of passengers and revenue compared to 2020.
Much of the reason lies with the closure of the airline’s loss-making maintenance operations in Brazil.
A note sent to Portugal’s Securities Markets Commission (CMVM) today showed this alone had cost €1.0249 billion.
Another reason comes from “the negative net impact from exchange rate differences (EUR 175.5 million) related with the depreciation of the Euro against the US Dollar (“with a strong impact on future rents and, therefore, noncash in this year”), and also the depreciation of the Brazilian real against the Euro,” said the note.
Otherwise, operating revenues totalled €1.3885 billion – representing an increase of 328.4 million (+31.0%) on those of 2020.
Passenger numbers alone brought in an increase of €218.8 million, while cargo and mail services revenue “soared by 88%, fully offsetting the first-half losses” and allowing 2021 to close with a positive recurring EBITDA (Earnings before interest, taxes, depreciation and amortization) of €11.7 million.
A separate press release explained how 2021 “was marked by severe restrictions on domestic and international mobility due to the Covid-19 pandemic, leading to an almost total grounding of the airline’s aircraft for several months.”
Throughout the second half of the year, “there was a gradual reopening of borders, although two of TAP’s main markets, Brazil and the USA, only resumed international flights with Portugal during the last quarter of the year.”
In terms of liquidity, as in the previous year, TAP continued to focus on steps to preserve it, with capital increases in May and December 2021 of €462 million and €536 million respectively, as part of the goverment’s ‘COVID-19 Damage Compensation and Restructuring Aid’.
TAP thus ended the year with €812.6 million in cash, 57% more than at the beginning of the year.
With regard to its route network, 2021 also saw the flights open to and from new destinations “such as Montreal, Cancun, Punta Cana, Maceió, Zagreb, Ibiza, Fuerteventura, Agadir, Oujda, Monastir and Djerba”.
In recent weeks, the press release continues, the war in Ukraine has caused relevant “macroeconomic impacts”, particularly at the level of international financial markets, including rising interest rates, as well as rising fuel prices, including jet fuel, “which has grown by over 30% since the beginning of the conflict, and a range of goods and services which has led to growing inflation.
“Additionally, the conflict led to restrictions on the circulation of airspace near the region, restrictions that remain in place at the date of approval of these financial statements, as well as the imposition of economic, financial and other sanctions on the Russian Federation and individuals associated with the Russian regime by the European Union, the United States and other countries, with impacts on the movement of people, goods and financial flows”.
In other words, uncertainty persists – and losses could well continue, depending on inflation and the price of fuel “in the coming months and years”.
UPDATE: However TAP has tried to present these record-breaking losses, the media’s response has been blistering. Correio da Manhã director Carlos Rodrigues wrote the next edition’s ‘post card’ commentary, saying the government’s insistence in re-nationalising TAP has created yet another “gigantic financial hole with retarding shock effects that threaten to last for decades”. Mr Rodrigues’ dubbed TAP’s losses “pornographic”: putting the airline in the same category as the banks for which Portuguese taxpayers continue to pay.