TAP ready for takeoff

There is no way around it: selling TAP is imperative, even though the government has gone from the idea of ​​100% privatization to putting only 49% of the Portuguese airline up for sale. Pressure from the opposition, one might say. The Minister of Infrastructure has already admitted that he wants to conclude this sale process in the coming weeks and the Minister of Finance has also hinted at this deadline. And Miguel Pinto Luz has maintained his position regarding the future of the company: “Privatization does not mean giving up. It means ensuring that TAP is viable, strategic and useful for the country”, which is in line with recent statements by Secretary of State Hugo Espírito Santo, who argued that only through privatization can a company be sustainable in the future. “A process that must be carried out with the support of a strategic partner”, he said.

For now, the Government has the assessments in its hands to move forward with the sale, given that Banco Finantia and EY have already submitted the reports assessing the commercial value of the Portuguese company. The value remains a secret, but the Executive still has not taken the first step of creating a monitoring committee, as Sérgio Palma Brito warned Nascer do SOL.

“The value presented in the assessments is confidential and it is very unlikely that it will be disclosed now. They will keep it locked away in a highly restricted safe, but the serious thing is that the Government is required by law to create a privatization monitoring committee that must be made up of competent and independent people, and so far nothing has been created. The Government is failing to comply with the rules of transparency and they cannot say that they have not yet started the process because otherwise they would not have requested the assessments,” he stresses. And he leaves a message for the Minister of Infrastructure: “Pinto Luz should be careful, because he is kicking a hornet's nest.”

Pedro Castro, an aviation specialist, commented on Nascer do SOL on the fact that the Government has already received the two reports, explaining that “this type of report helps the Government to understand the market value of the company and to distance itself from the emotional and electoral value – which is usually expressed by statements such as ‘our flag in the skies’ or ‘our new caravels’”, adding that they are generally quite complete “and also include an identification of risks and threats, which is precisely what potential buyers will use to ‘negotiate’”. In this sense, “the Government will be better prepared to frame and address some of these issues and concerns”.

Asked if he has any idea what values ​​we are talking about in these assessments, the expert says that there are several elements that will be analyzed and that the brand is the most obvious, giving the example of the extinct Alitalia which was recently bought for 90 million euros. «The rest of Alitalia's air business (without the brand) was sold for a symbolic one euro, due to the huge liabilities».

In the case of Portugal, Pedro Castro adds, “it seems that the company’s toxic assets – including the 177 million euro debt to the Brazilian airline Azul, for example – were placed in TAP SGPS, which is now called Siavilo SGPS, in order to lose the connection to the airline’s name and which is now without corporate bodies. It is clear that, sooner or later, taxpayers will be called upon to pay the liabilities of Siavilo SGPS and that no one will link this to TAP.”

In other words, he adds, "what is intended to be sold now is TAP Air Portugal, and what is stated in it are, in fact, the least dysfunctional parts of TAP, of which the TAP Maintenance and Engineering unit has stood out most clearly. Of the flight unit itself, the most valuable is the slots at Portela airport."

Pedro Castro adds that TAP owns around 50% of the landing and take-off slots «at a so-called congested airport, that is, it has a huge 'natural fortress' against competition and a very comfortable growth capacity. Contrary to what is said, TAP has no impediment to growing at Portela – it only needs to change the fleet of 20 TAP Express aircraft from the current 100-seat aircraft to 150 or 160-seat aircraft and that alone will grow by 50%. It just needs someone who can invest in this new fleet». Therefore, the expert says he believes that «we will not hear about the 'new' Lisbon airport for a while, in order to protect this high value of TAP as much as possible».

Taking into account this framework and the restructuring that was “strategically carried out of the ‘good TAP’ and the ‘bad TAP’, I am convinced that the value of 100% of the ‘good TAP’ will be somewhere between 1.2 and 1.5 billion euros. The future buyer will also take into account the cost and scale synergies obtained by the group with this purchase. This is, for example, an aspect that will not be included in the Government’s reports because it is something intrinsic to the buyer”.

Selling 100% Unlike the Government, which rules out the possibility of selling 100%, the experts contacted by Nascer do SOL criticise this position, arguing that the best solution would be to sell the company in its entirety. «The Brigade of 'the State in charge of TAP' and 'privatising less than 50%' has just clashed dramatically with the European reality that they have insisted on ignoring since 1993. Portugal must do what Spain, Ireland, the United Kingdom, France, the Netherlands, Austria, Switzerland, Belgium and Italy, which are moving in that direction, have done, which involves privatising 100% of TAP, possibly starting at 51%, with a commitment to reach 100%», says Sérgio Palma Brito.

Pedro Castro also believes that selling only 49% of the airline “is a huge disadvantage, especially given the political dimension associated with it. Taking into account the ideological debate surrounding TAP and what the current parliamentary majority advocates, AD and Iniciativa Liberal are the only parties that would be open to a 100% sale.” And they are in the minority. The aviation expert then asks some questions: “How long will this group remain a minority? Will the sale of 49% go so well that the other parties will later be convinced by the 100% sale? Or will the PS take another radical turn to the left or will Chega become government and both, for populist reasons, start treating the minority private shareholder badly, as happened during Pedro Nuno Santos’ time? All of this is a big unknown.”

Possible buyers As for the possible buyers, Pedro Castro says that TAP will be from the group “that is best prepared to take on a company that needs investment” – recalling that the State was authorized by the European Commission to donate 3.2 billion euros, “but cannot invest in the company” -, “the group that can deal best with the unions and the group that will have the appropriate antidote to deal with a shareholder State that has dysfunctional and populist tendencies”. In addition to this, he argues, “the group that, from a competition point of view, is best protected from overly punitive remedies by the Competition Authority in Brussels and in other jurisdictions”.

This mix of financial, social, political and competitive components, in the opinion of the aviation expert, «will be decisive in determining which is the 'best' group – the rest, whether the planes go more to the left or more to the right, in the end all the groups want exactly the same thing from TAP, which is to grow and make money».

Palma Brito also focuses on these three main interested groups, downplaying other candidates, as has been suggested by the Government. “Only these three groups will consolidate TAP”, lamenting the idea put forward by Carlos Tavares, former CEO of Stellantis, who is betting on the idea of ​​the State holding 40% of the capital of the airline, the workers another 20% and the creation of an investment fund with another 20% that includes national tourism companies. The remaining 20% ​​would be sold to an airline from outside Europe.

«Carlos Tavares defends an independent TAP on a continent where the major airlines are consolidated, with the exception of Finnair. These countries consolidated the 'national airline' from before 1993 into a 'European airline', without a single case of the decision being reversed. We cannot go back to the 'proudly alone' and ignoring 'the winds of history' of the past. PS and PSD defend consolidation into one of the three European groups (IAG, AF/KLM and Lufthansa Group)», recalled the expert. A position that is in line with what has been defended by Luís Montenegro: «TAP must be integrated into a large European group, which ensures the hub in Lisbon and the connection to the Portuguese communities»

Results weigh Another criterion that will be taken into account concerns TAP's results. In the 1st quarter, the company reported a loss of 108.2 million up to March, 18.1 million less than in the same period of 2024, in a 1st quarter impacted by "extraordinary events", as admitted by the company.

One of these episodes concerns the PGA pilots' strike, which lasted for 20 days. "The comparability of operating results was also affected by the shift of Easter to the 2nd quarter in 2025, unlike 2024, when it occurred in the 1st quarter. It is estimated that, together, they had a financial impact on operating results of between 30 and 40 million."