“Nowhere near enough to recover past losses” – but definitely a step in right direction
Hot news of the day is the profit registered by flagship airline TAP after so many years of crippling losses – at huge cost to the public purse.
But the details have been lost somewhat in the controversy still surrounding the company whose CEO was unceremoniously dismissed over live television earlier this month, and whose request to present these profits herself has been denied by the government.
Christine Ourmières-Widener’s ‘moment of glory’ therefore was reduced to a written report, in which she insisted on the importance of her results: “During Q4 (4th quarter of) 2022 TAP was able to generate the highest quarterly revenues in its history and record profitability, despite continued operational challenges. During the first full year of the Restructuring Plan, TAP generated an operating profit that is an all-time record for the company. TAP also generated a very strong positive net profit, taking into account its level of leverage.
Ms Ourmières-Widener is said to be preparing a lawsuit for unfair dismissal in which she will be requesting compensation of around €3 million (covering the bonus written into her contract, and earnings lost due to her contract being terminated).
Meantime, economist João Duque has been telling reporters that the profits for 2022 “are not sufficient to recover past losses”.
They are nonetheless profits, and thus “could be a starting point to make the airline more attractive for investors (…) TAP is going to be reprivatised and so we have to think in those terms: how attractive are these results to make TAP truly appetising”, he questioned.
Slightly being glossed over is the fact that these profits come ahead of “the objective defined by the European Commission” which sanctioned the government’s €3.2 billion bailout of the airline, on the basis of a restructuring package. The commission was not expecting positive operating results until 2023, says Lusa – and has not envisaged TAP actually making concrete profits until 2025.
Lusa’s report on today’s news recalls that “last year, profit before interest and taxes (EBIT), was also positive, reaching €268.2 million, including non-recurring items of €19.4 million.
“TAP carried a total of 13.8 million passengers in 2022, which corresponds to an increase of 136.1% on the previous year, reaching 81% of 2019 levels.
“Revenues, meanwhile, reached €3.485 billion, up 151% year-on-year, along with a higher level of activity, with ASK (a metric that calculates the total seat capacity available on each flight) increasing 94.2%.
“The number of flights operated increased by 74.9%, last year, reaching 79% of pre-pandemic crisis levels.
“Capacity reached 87% of pre-crisis levels, increasing 94.2% year-on-year, and the ‘load factor’ (a metric to measure a flight’s occupancy rate) improved 17 percentage points year-on-year to 80%, just 0.1 percentage points below the 2019 level.
“Passenger revenue per seat-kilometre offered (PRASK), meanwhile, was 6.68 euro cents, an improvement of 48. 2% compared to 2021 and 20.5% compared to 2019.
“The cost of fuel more than tripled in 2022, increasing by €756.2 million year-on-year to €1.096.7 billion.
“The effect of higher fuel prices contributed €458.4 million to the increase in fuel costs.
“Year-to-date, the cost per seat-kilometre (CASK) of recurring operating costs decreased by 10.7% compared to the previous year, down to 7.04 cents.
“Excluding fuel, the reduction was 27.8%, taking unit costs without fuel to 4.66 cents, only 0.5% below the 2019 level (4.68 cents).
By refusing the outgoing CEO’s request to present these results in a press conference, the government has effectively diminished today’s news.
Elsewhere, Correio da Manhã reports that SPAC (the pilots syndicate) has signed a pre-agreement with TAP that will now be taken to members for a vote.
This too is a significant advance on past labour issues where SPAC was constantly berating management. Among matters agreed “is the new per diem scale from April, the cessation of the intended collective dismissal and the payment of general assistance at the airport and simulators”, says the paper.