MIAMI – On Monday, TAP Air Portugal (TP) posted its financial results for Q1 2020, showing a huge loss of USD$443m. After a positive start in the first two months of the year, things took a turn for the worse.
In a statement, TAP explained, “Activity decrease in March 2020 as a result of the COVID-19 pandemic, negatively impacted performance in the first quarter, offsetting the good performance observed in the first two months of the year.”
Now, according to abc.es, the Portuguese socialist government has decided to nationalize the flag carrier due to the cessation of its activity caused by the COVID-19 pandemic.
TAP saw passenger numbers drop by approximately 54% in March compared to the same period in 2019.
Amid the recent bad news, TAP shared some fleet updates, informing of two new A330neo and one A321neo it took delivery of. With one A319 retired, the airline will end the quarter with 107 aircraft.
However, TAP has confirmed the retirement of one A320, one A321, three A319, and one E190, for a total of six aircraft. Fleet size is expected to be further reduced as the year continues, with the fleet plan “Currently under revision by the airline.
3 months of capacity reductions
On March 20, TP announced temporary capacity reductions following the travel restrictions and the drop in passenger demand.
At the time, the company’s network involved 90 destinations in 36 countries worldwide, operating 3,000 weekly flights on a fleet of 85 Airbus aircraft and 21 aircraft in TAP Express livery.
A Looming Nationalization
With the nationalization, 45% of the company remains in private hands, in charge of the Portuguese-Brazilian Atlantic Gateway consortium, headed by magnate David Neeleman and local businessman Humberto Pedrosa, both responsible for the negotiation with Lisbon.
According to Francisco Chacón of abc.es, the talks have not come to fruition and there has been no agreement regarding the offer of a loan worth €1.2bn.
This situation has resulted in Portugal Prime Minister Antonio Costa sending the order of nationalization to the presidency of the Council of Ministers.
Neeleman, whose management has been in doubt for months in Portugal, did not accept the conditions defended by the Government. However, by rejecting the government’s proposal, he risks being removed from the management by the state owners, the latter having a slight majority in the distribution of roles.
The first official reactions were swift and the Minister of Infrastructure, Pedro Nuno Santos, was quick to declare: “TAP is too important for the country to afford to lose the company.”