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Portugal Prepares for Privatization of National Airline TAP

By BNN Newsroom
Portugal Prepares for Privatization of National Airline TAP
Portugal Prepares for Privatization of National Airline TAP

Anticipated Privatization of TAP

Portugal’s national airline, TAP, is set to undergo privatization, following an announcement by the Prime Minister of Portugal, António Costa. The government is scheduled to approve the law outlining the criteria for the airline’s privatization on September 28th in a Council of Ministers meeting. Costa revealed this during a debate on the censure motion of Chega, aiming to alleviate criticism of the government on topics like housing, health, education, and taxes.

Costa highlighted the government’s successful implementation of TAP’s restructuring plan, which has been recognized by the European Commission. “Next week, we will approve the decree that establishes the framework for the privatization of TAP, defending the company and the interests of Portugal and the Portuguese,” Costa stated.

TAP’s Financial Performance

Costa also noted that TAP has not only avoided losses in 2022 but also managed to generate profits. He pointed out that “This year, 7.6 million passengers were transported in the first half, already reaching 96% of the passengers transported in the pre-pandemic period.”

Recognizing TAP’s strategic importance, Costa revealed that the government is considering selling part or all of the company’s capital, keeping Portugal’s interests in mind. The privatization framework diploma, which will outline the specifications, is crucial for the process to progress. Fernando Medina, the Finance Minister, had previously suggested in July that the airline’s sale should be finalized in the first half of 2024, asserting that there was no urgency.

Commencement of TAP’s Sale Process

The process for TAP’s sale commenced in April when the Council of Ministers approved a resolution mandating the Finance and Parpública to initiate the airline’s evaluation by two independent entities, EY consultant and Banco Finantia.

The sale value of TAP remains under wraps. The last known evaluation of the carrier was in June 2019, when Deutsche Bank estimated its value between 637 and 1,035 million euros as part of the process for capital dispersion in the stock market, which did not proceed. Prior to this, in the 2015 reprivatization, PwC and Deloitte valued TAP between negative 34 million and negative 512 million euros.

Next Steps in Privatization

With the government set to approve the legal framework for privatization next week, it implies that the airline’s evaluation should be nearly complete. Medina had clarified in April, when the government approved the first step of privatization, that the government would only proceed with the decree-law that determines the specifications once the evaluations are ready.

Several European airline groups have expressed an interest in the Portuguese airline, including Lufthansa, International Airlines Group (IAG), and Air France-KLM. However, these potential acquisitions are pending further discussions and assessments of TAP’s value and the conditions under which it is privatized.

As the privatization process of TAP progresses, it signifies a shift in the aviation industry of Portugal. The government’s decision to privatize TAP not only reveals its strategic approach to managing national assets but also its commitment to safeguarding the interests of Portugal and its citizens.


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