Portuguese finance minister: TAP restructuring plan in final stages

Discussions with the European Commission on the restructuring plan of national flag carrier TAP are in the final stages, with approval expected before Christmas, Finance Minister João Leão said on Tuesday in Brussels.

“It has been going well. We are practically in the final stage, and we hope in the coming weeks to conclude the negotiation. The expectation is that it will be approved by the end of the year”, he said.

Leão, speaking to the press after attending a meeting of EU finance ministers in Brussels, said he could not guarantee that the airline’s restructuring plan would be approved this month.

“At this moment, we think that things are looking good. There was a question about an alternative funding source other than the state, and that question has been resolved. And there was also an issue on the table about the slots that the company had to give up, based on guidelines also from the Directorate-General for Competition [of the European Commission], and that issue I think will be resolved,” he said.

Asked whether he could guarantee that there would be no losses for bondholders, Leão noted that the restructuring plan does not involve any measure that affects TAP bondholders.

“On the financial side, the issues were resolved, there are no significant changes from what we had proposed. There is only the issue of considering additional alternative financing that was planned but not by the state, and on the other hand, there are more specific issues of company operations that were being discussed, but nothing that jeopardises the company’s bondholders,” he said.

The state regained control of TAP in 2020 and currently holds 72.5% of its capital. The company was severely affected by the COVID-19 pandemic, and the European Commission authorised state aid of up to €1.2 billion to assist.

On 12 March, the government submitted a notification to the European Commission for interim aid to TAP of up to €463 million, intending to ensure the airline’s liquidity until the restructuring plan is approved.

As part of the state support to deal with the consequences of the pandemic, a restructuring plan is being implemented, which has led to job cuts and is still awaiting the ‘green light’ from the Commission.

According to the report accompanying the draft budget for 2022, the government plans to inject €1.98 billion into TAP in 2021 and 2022.

(André Campos and Inês Nogueira | lusa.pt)