TAP’s profits “don’t even cover interest on their debt”
Economist João Duque explains that TAP's finaincial situation is showing improvements on last year, for example, but in terms of pre-2019, the numbers are still lagging

TAP’s profits “don’t even cover interest on their debt”

Media puts yesterday’s PR exercise into perspective

As the dust settles on all TAP’s ‘good news headlines’ of yesterday – there was even the declaration by CEO Christine Ourmières-Widener that if profits continued into the final quarter staff could look forward to salary increases – the reality of the airline’s financial situation has shone through: 3rd quarter profits, albeit historic, were still not enough to cover interest payable on TAP’s debt.

And even with the heartwarming €111.3 million profit, the overall loss this year is still standing at €91 million.

Wednesday was all about blowing trumpets – a practice becoming increasingly popular in national politics: make enough noise and people might not realise what is really going on.

Tabloid Correio da Manhã, like so many other media outlets, hasn’t taken long to work out the maths: “Effectively, the profit obtained (between July to September) did not even pay to service the company’s debt, which is €173 million.

“Gonçalo Pires, responsible for TAP’s financing clarified that that airline continued to present accumulated losses up to September due to its total debt of €3.7 billion, which puts the airline at a disadvantage in relation to its competitors.

“Just the operational and financial leasings of planes add up to €2.7 billion.

“In spite of this enormous ballast, the executive president of TAP defends the company’s strategic plan as “good and bringing good results”, says the paper.

“Christine Ourmières-Widener affirmed yesterday that ‘we have less planes but they are more full and the prices are better. TAP increased ticket prices at the start of the year by an average of  23% – an average that has been practised by the sector throughout the world”.

In other words, prices (for the company) would be ‘better’.

Economist João Duque has also been analysing  TAP’s assertions – very much designed to make capital out of the interest to purchase potentially being shown by the IAG aviation group – saying it was impossible to work out whether Christine Ourmières-Widener was even telling the truth. “No one knows the plan” TAP’s CEO described, he told SIC. “No one knows what the forecasting is” and in “having no idea, no one can confirm” that the plan is indeed ‘working’.

Also ticking through all the “stones in the shoe of TAP” – not least the threat of strike action by syndicates (which Ms Ourmières-Widener claims would be a “disaster” – Dinheiro Vivo adds that there are no plans, whatever happens, for the airline to repay the €3.2 billion in State aid that will have been ploughed into it by the end of this year.

“According to Gonçao Pires, the plan does not provide for this because it is compensation through a capital increase and not a loan”, says the online.

Reports suggest that it is this week that TAP’s CEO will have to decide on the number of flights to be cancelled during the Christmas and New Year period.

natasha.donn@portugalresident.com