Published in December 2015 issue

On its 70th anniversary, Portugal’s flag carrier sees blue horizons after Brazilian carrier Azul invested to become its majority shareholder. Former JetBlue—and now Azul—CEO David Neeleman, believes TAP can become one of the best carriers in the globe. Here’s the history of TAP Portugal and the airline’s reasons for optimism.

By Daniel Carneiro

Some 500 years after the age of the great Portuguese sailors, which culminated with the arrival of Pedro Álvares Cabral on the shores of the future Brazilian state of Bahia, TAP Portugal (TP)—which commemorates its 70th anniversary in 2015 —follows in the footsteps of these pioneers, reinforcing the ties between the sister nations and consolidating its position as the main airline linking Brazil and the Old World.

Nowadays, TAP’s network—including the service of its subsidiary, PGA—operates approximately 500 flights per week and serves around 80 destinations in 35 countries in Europe, Asia, the Americas, and Africa. It connects even more destinations around the world through its Star Alliance partners and by means of commercial agreements such as the one signed with Brazilian airline GOL.

The Portuguese carrier had to weather hard times in 2014: a drop in investments, lack of aircraft to cope with demand, and crew strikes. But the airline is now in a turnaround, thanks to privatization and to having transferred control to a group of investors that includes David Neeleman, founder of JetBlue (B6) and Azul (AD).

TAP Portugal is preparing to grow once again, and is planning to further reinforce its presence in the Brazilian market and to put its chips in the US market.

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TAP: THE PORTUGUESE AVIATION PIONEER

Portuguese aviation has a proud history. The first air crossing of the South Atlantic was undertaken in 1922 by Sacadura Cabral and Gago Coutinho, who inspired Charles Lindbergh and Saint-Exupéry.

The first Portuguese airlines included APAero Portuguese, which flew the route between Portugal and Morocco that was the only regular link between Europe and North Africa during the Second World War—as immortalized in the film Casablanca.

At the end of the war, the Portuguese Secretariat of Civil Aeronautics decided to organize civil aviation for the nation, creating, on March 14, 1945, the Secção de Transportes Aéreos (Transportes Aéreos Portugueses). Its founder was the then-Lt. Col. Humberto Delgado, who had played an important, if little-known, role in the Allied invasion of Normandy on June 6, 1944, by preparing an airbase on Lajes in the Azores for British and American air forces.

TAP’s first group of Pilots, all coming from the Aeronáutica Militar, was sent to England for training, becoming known as ‘The Eleven from England’.

One week after V-E Day (the date of the Allied victory in Europe), Delgado traveled to the United States to acquire TAP’s first aircraft: three war surplus Douglas C-53s, which would be converted to their civil version (the DC-3). Largely used for transport and paratrooper service during the conflict, these twin-engine aircraft were widely available at war’s end, and soon became the basis of commercial aviation all over the world.

As soon as the C-53s arrived in Portugal, an experimental service, free of charge, was started linking Lisbon to Oporto, Portugal’s second largest city, with the aircraft still in their military configuration. The first TAP scheduled route started on September 19, 1946, connecting Lisbon to Madrid, by aircraft CS-TDF ‘Abel Rodrigues Mano’. On December 31, after just three trial flights, the regular link between Portugal and its African colonies was opened. Called the Linha Imperial, or Imperial Line, it linked Lisbon, Luanda (Angola) and Lourenço Marques (today Maputo, Mozambique).

The first flight, with 12 stops, was operated by a DC-3, registered CS-TDE; it lasted six days— an enormous advantage over the sea service, which, on average, took 30 days—over a distance of around 23,000km (14,300 miles). The skills and professionalism of the TAP aircrews was internationally acclaimed; they were also responsible for most of the topographical survey of the regions, between Portugal and Mozambique, in which their aircraft landed.

In 1961, TAP announced its entrance in the jet era, ordering three SE210 Caravelle VIRs, which were re-named with the Portuguese equivalent of the French word: Caravela. The jets entered service in 1962 on flights to Madrid, and later to Paris, London, Zurich, Geneva, Frankfurt, Munich, Amsterdam, Copenhagen, and many destinations in Africa.

In 1964, the airline reached its first million-passenger mark, and, in 1965, it took delivery of its first Boeing 707, which immediately began flying to Angola, Mozambique and South Africa. On June 17, 1966—the anniversary of the Gago Coutinho and Sacadura Cabral flight—TAP introduced the new jet on flights to Brazil, linking Lisbon and Rio de Janeiro. In the same year and with the Boeing 707, the airline started flights to New York, their first to North America.

In 1967, TAP took delivery of its first Boeing 727-100 and retired its L-1049G, becoming, along with Alitalia (Airways, November 2015), the first airline operating exclusively with jets in Europe.

As the ‘70s started, the airline opened new facilities at Portela Airport (Lisbon), and introduced its first wide-bodies— two Boeing 747-200s: CS-TJA ‘Portugal’ and CS-TJB ‘Brasil’—on flights to Rio de Janeiro. In 1974, TAP introduced new computerized reservation, load control, and check-in systems, and became the first European airline to completely overhaul the 747s’ JT9-D engines.

The 1975 struggles for independence of Portugal’s colonies put TAP to a new test: establishing air shuttle operations to repatriate Portuguese citizens from Angola and Mozambique. TAP mobilized its fleet to transport the highest possible number of passengers (its one-day record was achieved on September 11, with 1,500 passengers), with some crews working non-stop for more than 24 hours. That same year, control of TAP passed to the state, and the airline received its first Boeing 727-200.

In 1976, the company started flying to Caracas, Venezuela, and, in 1978, it started operations to Salvador (as an intermediary stop on some flights to Rio de Janeiro). In 1979, the airline adopted a new name—TAP-Air Portugal— as well as a new visual identity, which it retained until 2005.

Three years later, TAP started renovating its fleet, gradually de-activating its Boeing 707s, 727-100s and 747-200s, and adopting (in 1982) the 737-200 and the Lockheed L1011-500 TriStar. TAP also earned certification as a US Federal Aviation Administration (FAA) Repair Station, and signed a contract with Federal Express for the maintenance of that company’s cargo 727-100s.

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A NEW RELATIONSHIP WITH AIRBUS

In 1985, the company established the TAP Museum at an Air Force base located 20 miles (32km) west of Lisbon. It also started two subsidiaries, Air Atlantis (charter) and LAR (for regional domestic flights). In 1987, besides ordering some 737-300s from Boeing, TAP became an Airbus customer, announcing the acquisition of its first A310; which entered service in 1988. As the ‘80s ended, TAP became the first airline to establish a ground-to-air satellite link for communications, inaugurated a computerized system for calculating fares and emitting air tickets, and introduced non-smoking rules on some flights.

In 1991, TAP was transformed into an open-capital, mostly public, company. In 1993, the company received its first Airbus A320, and, in the following year, added its first two A340-300s to replace the L-1011 on long-distance routes. Also in 1994, to shore up its flagging finances, the company reformulated its route network, dropping some money-losing routes.

In 1995, on its 50th anniversary, TAP presented the TAP 2000 project, which was aimed at modernizing the airline. To standardize its fleet, TAP announced the acquisition of 22 A319s and A320s to replace its 737s, and started its own website. The last flight of a Boeing aircraft with TAP colors took place on March 24. On June 1st, a female Captain sat in the left-hand seat of a TAP aircraft for the first time (on a Lisbon-Milan flight).

DOMINATING BRAZIL

In 1998, to boost its share of the Brazilian market, TAP signed a code-share agreement with TransBrasil. In 2000, TAP began the MOP project with the goal of structuring itself into three business units—air transport, handling and aircraft maintenance. This became effective in 2003, with the creation of Grupo TAP.

Fernando Abs Pinto, the former president of Rio-Sul and VARIG, headed the group. In 2001, with VARIG struggling financially and reducing international routes, TAP became the preeminent European airline in Brazil, offering daily flights to Rio de Janeiro, São Paulo, and Recife.

NEW NAME AND IMAGE

In 2005, in its 60th year, TAP introduced a new color scheme and logo, both of which are still in use today, and changed its name to TAP Portugal. On March 14, it joined Star Alliance. It rebranded its charter subsidiary, yes, as White (WI) and sold it to the OMNI Aviação group. In 2006, the company announced that it had ordered its first A330-200s (today the most important aircraft on long-distance routes), and, in the following year, acquired PGA (Portugália Airlines), becoming even stronger in the European market.


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TURBULENCE AHEAD

Until 2007, the airline achieved good results, but was not immune to the 2008-2009 world economic crisis, its problems being aggravated by the increase in the cost of oil and of its derivatives. At the end of FY2008, TAP registered a loss of €285 million. Even so, it was one of the least affected airlines, mainly thanks to its strategy for the Brazilian market, occupying the void left by VARIG in the link between Brazil and Europe.

TAP concluded the first decade of the 21st century with ambitious plans, announcing an order for 12 Airbus A350-900 XWBs (plus an additional three as options), to enter service in 2017. The company operated in the black until 2012, but the limits imposed by the European Community on governmental investments in airlines hindered its growth expectations, contributing to the crisis that preceded its recent privatization.

Without the resources to increase its fleet in the short term, TAP found it difficult to cope with growing demand. This, along with crewmembers’ strikes, resulted in the cancellation of flights and a loss of €85.1 million in 2014 (€79.2 million more than in 2013).

The company’s liabilities reached €1.062 billion, including the leasing of aircraft and bank debts. Adding to the losses was the poor performance of its Brazilian MRO (Maintenance, Repair, and Overhaul) subsidiary, TAP Manutenção e Engenharia Brasil (acquired from VARIG), which registered a loss of €22.6 million (45% worse than in 2013).

To meet passenger demand, in 2013 and 2014, TAP took delivery of six new aircraft (two ex-TAM A330s and four A320s).

Although going through difficult moments in the last two years, TAP continues to be internationally recognized for the quality of its services. It was named ‘Best Airline’ by Condé Nast Traveller magazine and ‘Trusted Trademark’ by Reader’s Digest in 2010. World Travel Awards has consistently named it the ‘Leader World Airline for South America’ and ‘Leader World Airline for Africa’. Global Traveller has repeatedly honored TAP as ‘Best Airline in Europe,’ and, in 2012, the socialbakers.com website awarded it the ‘Best Facebook Customer Service’ title.

TAP IN FIGURES

TAP is the absolute leader in flights between Europe and Brazil, reaching 12 destinations in the country: Belém (BEL), Belo Horizonte (CNF), Brasília (BSB), Campinas (VCP), Fortaleza (FOR), Manaus (MAO), Natal (NAT), Porto Alegre (POA), Recife (REC), Rio de Janeiro (GIG), Salvador (SSA), and São Paulo (GRU).

The TAP group, including TAP and PGA Portugália Airlines, has 10,461 employees, of which 939 are Pilots and 2,588 are Assistants or Flight Attendants. Some 935 work in land facilities.

In 2014, the airline reached a record number of 11.4 million passengers transported (6.6%, or 711,000 passengers, more than in 2013). Its Victoria mileage program reached 1.6 million members. The TAP group has a fleet of 77 aircraft; 61, all Airbus, fly for TAP (four A340- 300s, 14 A330-200s, three A321s, 19 A320s and 21 A319s), and 16 fly for PGA (six Fokker 100s, eight Embraer ERJ-145s and two ATR42s).

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PRIVATIZATION, AT LAST

TAP studied the possibility of selling control to private capital in 2001 and 2007, but the two big crises faced by commercial aviation worldwide— caused, respectively, by the September 11 attacks and the Great Recession—postponed things until 2014.

On November 13 of that year, the Council of Ministers finally approved TAP’s privatization process, with the sale of 61% of the group’s capital to interested investors and 5% reserved for employees—and stating the intention of the Portuguese government of transferring the remaining of the capital by 2020.

The main acquisition proposals were presented by the Gateway consortium (led by the Portuguese land transportation entrepreneur Humberto Pedrosa, with 51%, and David Neeleman, founder of JetBlue and Brazilian airline Azul, with 49%), and by the Sagef consortium (led by Germán Efromovich, owner of Synergy Aerospace, which controls the Avianca group).

On June 21, 2015, the Gateway consortium proposal was announced as the winner, its main highlights being immediate investments of €350 million, the acquisition of 53 new aircraft, the modernization of the aircrafts’ interiors, the consolidation of Lisbon as a hub and the expansion of services to Brazil and the US, besides the preservation of the workforce. The expansion and renovation of the fleet involves the arrival of 14 A330-900neos (in lieu of the previous order for 12 A350 XWBs) and of 39 A321s and A320neos.

The first new aircraft to arrive, in the fourth quarter of 2017, will be an Airbus A330neo. This will be the Long Range version, entering service on flights between Lisbon and New York or Boston, and also to the Northeast of Brazil. Most of the other A321/ A320neos will be delivered by 2018. To cope with demand during the high season in the Northern and Southern Hemispheres, it is possible that TAP and Azul will exchange some aircraft.

At press time, the privatization still awaits the final word from the regulation authorities, especially the European Union entity that regulates competition. According to Humberto Pedrosa, Fernando Pinto may stay at the helm of TAP at least through the transition process.

AZUL HORIZONS FOR TAP

There is no question that Azul has become one of the strongest carriers in South America. Despite the economic crisis currently crippling Brazil, Neeleman has once again demonstrated that he has the courage and the vision to embark on yet another challenging project.

TAP has the potential to become a much stronger carrier, and, with Neeleman’s plans, there is no doubt that this will be accomplished. We certainly hope that whatever lies ahead for this historic carrier will be nothing but Azul skies.