TAP Rescue launched a year ago. Brussels’ response got lost in the way – ECO

“It wouldn’t be dangerous if you tried to convey the idea that we can do a restructuring without there being consequencesExactly a year ago this was announced by the Minister of Infrastructure and Housing, Pedro Nuno Santos TAP needed a bailout and the country is ready to lend up to 1.2 billion euros to solve the company’s problems. Circumstances took six months – It revolves around a significant reduction in salaries and operating costs – To be announced in a proposed plan that is still awaiting approval by the European Commission.

The Covid-19 pandemic has forced TAP, like other international airlines, to ground almost the entire fleet, leaving the company in financial trouble. I needed new money to ensure sustainability. Brussels agreed to support the emergency and Supplementary budget provided 946 million euros to help the company, but you had A financial cushion of approximately 200 million euros (was required).

a ‘OK’ from the European Commission (with six months to send the restructuring plan) It has unleashed government funding, but private shareholders still need acceptance. At the time, the state had 50% of the capital, Atlantic Gateway (jointly owned by entrepreneurs David Neleman and Humberto Pedrosa) had 45% and workers the remaining 5%.

David Neeleman didn’t have a euro to put in a TAP. We had a partner who didn’t want to put a penny into the airline.

After weeks of negotiations, The agreement concluded that the state owns 72.5% of the company And that Nielmann walked away with 55 million euros. According to the government, this money was not a payment for participation, but rather compensation for giving up additional benefits of 224 million euros that I was owed.

Pedro Nuno Santos later explained in Parliament, “David Neilman didn’t have a euro to put into TAP.” “We had a partner who didn’t want to put a penny on the airline. Gentlemen [deputados] They wanted us to guarantee, give a general loan guarantee to TAP, […] They will continue to run the company in accordance with their interests, […] Which is not in line with the good interests of the country and the Portuguese? “.

With Neilman, former CEO Antonwaldo Neves also came out, who will be replaced by Ramiro Sequeira on a temporary basis. In the case of Humberto Pedrosa, the Portuguese businessman (also a shareholder of the Barraqueiro Group) took a minority position and ceded his additional services without compensation, but left the board of directors to avoid potential conflicts of interest.

The state can enter with up to 3.7 billion euros

With the reorganized shareholder structure, A new CEO (even if it’s temporary) and the government with enhanced powersThen TAP began preparing a restructuring plan. At the time, even as the summer signaled that the pandemic might be drawing to a close, the entire sector was under severe penalties and international views suggest aviation continued to be affected for years.

With this conviction, the Minister of Infrastructure and Housing presented on December 10 Outline of the document sent to Brussels. The basic scenario refers to Accumulated revenue losses amounted to €6.7 billion by 2025. It is these losses that lead the airline to need more funds after the first check of 2020.

In 2021, it will be between 970 million and 1164 million euros. In 2022, the range is between 473 million and 503 million euros. This follows from 379 million to 438 million in 2023 and 392 million to 420 million euros in 2024. The cost of general support from 2020 to 2024 will be between 3,414 million and 3,725 million euros.

We hope to always stay below the bottom of the range and not have commitments above 3.3 billion, but we have to be prepared for a worst case scenario.

“We hope to always stay below the scale and not take on commitments greater than 3.3 billion,” says Pedro Nono Santos, but notes: “We have to be prepared for the worst case scenarioAnd he justified the needs: In addition to the “unprecedented crisis in the aviation sector,” TAP has “additional problems because it was already facing it before the pandemic.”

So a cut was needed. at pulp The company had to find a way to save 1.4 billion euros. For this, I negotiated with the unions to suspend the company’s agreements and replace it with Emergency agreements that include cuts of 25% in gross wages. At the same time, the voluntary measures program began: Agreed terminations, early retirement, advance retirement, part-time work, and unpaid leave.

Already in operating costs, Expected savings of 1.3 billion eurosTAP soon began renegotiating orders and payments with suppliers and lessors, with changes to the fleet and routes to adapt to the crisis in the sector. At the end of the period, in 2025, the fleet will consist of 99 aircraft (compared to 105 aircraft that entered the epidemic).

The new CEO is not waiting for Brussels

In December, the government said it expected Brussels to approve the plan in the first quarter of the year and ensure there was enough liquidity for the company to resist it until then. Time has passed and there is no answer yet. “I would say that what is happening is normal in these processes. There are many interactions, and additional clarifications and analysis are required“, Ramiro Sequeira explained last month. “We continue to stress that the delay means that there is no doubt about the process,” he added.

The final strategy and (mainly) the remedies imposed by the competition authority are not yet known. But this has not stopped the company from moving forward with changes in line with what is already known will be needed. TAP workforce decreased to 7,526 at the end of March, 1,617 fewer workers than at the beginning of the epidemicAnother 1,160 people saw their fixed-term contracts not being renewed. After the volunteer programs are closed, The company is now preparing for a mass dismissal of 200 employees.

Operationally, it transforms the fleet to increase efficiency and reduce costs. The fleet currently includes 93 aircraft, But By the end of the month, three more Airbus aircraft are supposed to be operational. This is while converting aircraft to the cargo sector that contains Compensation for breaks in passenger transport. Despite the changes, TAP incurred losses of 365.1 million In the first quarter of 2021, after a Record 1,230 million in 2020.

Fewer workers in a reduced fleet

But it is not possible to proceed with everything without “agree” from Brussels and Two key points remain related: more tranches of financial support and the entry of a new management team. The money issue was avoided in another way, with the European Commission Portugal’s request for temporary support of €462 million for TAP approved مليون. Although it comes from the same envelope, this money can actually be paid for as it compensates for the impact of the epidemic containment measures.

or check – Which entered as a capital increase and led the state to further strengthen its position in the company Giving the company the strength to face the coming months and waiting for approval to receive more support. Replacing the CEO is still waiting. Although the government has always said it intends to wait for the committee to announce the new leadership, The general meeting of shareholders is scheduled for June 24, so the name is already closed.

CEO of the airline It will be Christine Ormeier-Widner, with the progress of the ECO. The Director previously served as CEO of the Flybe Group (one of the most important regional airlines in Europe operating in the UK) and CEO of an airline. Leasing Specialized in the aviation sector, having also passed through Air France / KLM. At Linkedin, it defines itself as a conversion and restructuring specialist, which is exactly where TAP is.

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