The Portuguese government announced on Thursday (2 July) that it had reached an agreement with the private shareholders of its national flag carrier, TAP.
The government offered €55 million in return for which it will hold 72.5% of the company’s capital compared to the current 50%.
“In order to avoid the collapse of the company, the government chose to reach an agreement for €55 million,” said Finance Minister, João Leão in a joint press conference with Infrastructure and Housing Minister Pedro Nuno Santos.
The government, led by Prime Minister António Costa, also approved on Thursday a resolution recognising the public interest underlying the operation to support TAP with up to €1.2 billion.
Had the agreement not materialised, the government planned to meet “immediately” in the Council of Ministers to approve the nationalisation of the airline.
In 2016, TAP returned to the state sphere but had since faced troubled times which have now been exacerbated by the COVID-19 pandemic.
The company’s situation at the end of 2019, with a negative equity capital of €776.5 million, even forced the inclusion in this year’s general meeting of a point relating to the application of Article 35 of the Companies Code, which would entail the dissolution of the company, the reduction of the share capital to an amount not less than the equity capital, or the payment by shareholders of contributions to strengthen capital coverage.
The emergency situation now appears to have been resolved by the promise of state support.