Up, up and away… Portugal ploughs another €462 million into TAP despite EU court ruling

In spite of news yesterday that the Court of Justice of the European Union has annulled the decision approving €1.2 billion of State aid to be ploughed into loss-making airline TAP, the Portuguese government is ‘carrying on regardless’.

The next tranche of funding – €462 million – is due to be handed over any day now, and plans to buffer the airline with no less than €3.72 billion by 2024 are still ‘on track’.

Prime minister António Costa said yesterday’s that the court’s decision “has no consequence”, at least for the time being. 

Until it is ‘definitive’, the government means to ‘keep going’ with its original plan – despite the fact that other airlines exist that could easily fill any gap left by the collapse of TAP.

This at least has been the argument used by Ryanair – the company which took the State ‘bailout’ to the  European courts on the basis that it violates European rules on competition.

If, in the end, the court’s decision is upheld, sources have admitted “it will mean the end of TAP” – a scenario many Portuguese will say they have no problem with.

Ryanair has welcomed the court’s decision, stressing that the European Commission has actually approved €30 billion in State aid to various countries to ‘rescue’ ailing national carriers.

The European Commission meantime has said it is ‘analysing the next steps’ it will have to take, to provide improved ‘justification’ for the funding.

The court’s decision, published yesterday, also annulled the €3.4 billion in aid approved to ‘rescue’ Dutch airline KLM.

TAP meantime has written to its staff as a result of the court ruling, assuring them that “it will not have any immediate impact”.

The airline is busy reinforcing itself in terms of tourism, increasing its services between Portugal and UK to the point that it will have 93,000 seats available by the end of June. This will give TAP 34% of the potential ‘market’, ahead of competitors Ryanair (with 22%),  EasyJet (21%), British Airways (i16%), and WizzAir (7%).

natasha.donn@algarveresident.com