European competition regulators have thrown a lifeline to Portugal’s financially-stricken flag carrier TAP, allowing the Portuguese government to convert the bulk of the €1.2 billion rescue loan it made into shares of the company.
Without the EU agreement, TAP would have been forced to repay the loan, which it can’t, or go out of business. Altogether, the approval allows Portugal to take equity or ‘quasi-equity’ in the airline up to about €2.55 billion. In return, TAP will be required to give up 18 slots at Lisbon Airport, where it has been the dominant carrier and where slots are limited.
During the early months of the pandemic, the already financially-weak TAP veered close to bankruptcy before government intervention. Also in the EU deal is permission for TAP to grow back to a 99-plane fleet, ending suggestions that it would become a smaller, largely regional carrier. Left unclear for the future is whether the government will continue to steer the airline, or attempt to find a buyer for its shares.
