LISBON, Portugal (AP) — The Portuguese government announced Thursday it is increasing its stake in TAP Air Portugal from 50% to 72.5% after prolonged negotiations with the airline’s minority private shareholders on how to save the money-losing company.
“The state will now play a key role in TAP,” Finance Minister Joao Leao said at a news conference.
The European Commission recently granted the Portuguese government permission to inject 1.2 billion euros ($1.35 billion) into TAP, on the condition it scaled back the airline’s operations and cut its costs.
The government, in return for injecting cash into the company, wanted more control over its finances, but the private investors resisted changes to TAP’s financial structure, Infrastructure Minister Pedro Nuno Santos said.
TAP is one of Europe’s smaller national airlines and is part of the Star Alliance, a global airline partnership. TAP has around 10,000 employees and some 100 aircraft. It flies to more than 80 destinations in about 30 countries, focusing mainly on North and South America and Africa.
It reported a loss of 395 million euros ($443 million) in the first quarter, before Portugal felt the full brunt of the new coronavirus pandemic. The company also posted losses in the previous two years.
Transport Minister Pedro Nuno Santos told parliament earlier this week that the flag carrier “is too important for our country to let it fail,” largely because it brings about half of the tourists who arrive by air. “It would be a disaster if we lost TAP, ” he said.
TAP was privatized in 2015 by a center-right Social Democratic government eager to find revenue in the aftermath of a national financial crisis. The buyers included U.S.-Brazilian airline investor David Neeleman, chairman of Brazilian airline Azul.
But a year later, a center-left Socialist government took office and negotiated a 50% public stake in TAP. The consortium of private investors kept 45% and the airline’s staff were sold 5% of the company.