The Portuguese government reached an agreement with the private shareholders of the TAP airline. The state will increase its share in the company to avoid its bankruptcy.
The government will invest €55 million to increase its share in the capital of TAP from 50% to 72.5% in order to save the flag carrier from the coronavirus crisis affecting the whole industry, explained Finance Minister Joao Leao. “The activity of TAP has enormous strategic importance for the country,” commented the minister. TAP reported a first-quarter net loss of €395 million.
“Almost 90% of our tourists arrive by plane, half by TAP,” the Infrastructure Minister Pedro Nuno Santos had stressed in the days leading up to the deal.
Under this agreement, the current shareholder David Neeleman will withdraw. The second shareholder will remain the Portuguese entrepreneur Humberto Pedrosa with 22.5% shares of the carrier. The two businessmen used to own a 45% interest in the airline through the Atlantic Gateway consortium.
The group’s current CEO, Antonoaldo Neves, appointed by Neeleman, will be replaced, Santos announced. The name of the successor has yet to be communicated.
The government initially offered shareholders a loan of up to €1.2 billion to bail out the group, which was subsequently approved by the European Commission. However, the conditions had been rejected by the board of directors.
In February 2020, prior to the crisis, media reports indicated that David Neeleman had entered negotiations with Lufthansa (LHAB) (LHA) in order to divest from TAP. The carrier had just reported a €105.6 million loss in 2019.
