UPDATE: EU regulators approve 462 million euros loan for Portugal’s TAP airline

Reading Time: 2 minutes

BRUSSELS, April 23 (Reuters) – The European Commission said on Friday it had authorised a loan of 462 million euros ($556.9 million) from the Portuguese government to airline Transportes Aereos Portugueses (TAP) to compensate for damage suffered during the pandemic.

The airline, similar to others across Europe, incurred significant losses due to travel restrictions in Portugal and destination countries, the Commission said.

“This measure will enable Portugal to compensate TAP for the damage it suffered as a direct result of the travel restrictions that Portugal and other destination countries had to implement to limit the spread of the coronavirus,” EU antitrust commissioner Margrethe Vestager said in a statement.

The support, in the form of loan, may be converted into capital and disbursed to TAP in one or several instalments.

Portugal’s airline TAP posts $1.2 bln euro 2020 loss as COVID-19 stifles travel

Portugal’s ailing state-owned airline TAP posted an annual loss of 1.2 billion euros ($1.44 billion) as passenger numbers fell by almost three quarters last year due to the impact of the COVID-19 pandemic on global travel.

The airline received a 1.2 billion-euro rescue loan in 2020 from the state, which holds a 72.5% stake, allowing it to keep operating and end last year with a cash position of about 520 million euros, TAP said.

“Both the operation and the results in 2020 were severely impacted by the drop in activity as a result of the COVID-19 pandemic, with passenger numbers falling 72.7%, after growing for four consecutive years,” the company said.

It is the third year in a row the airline has posted a loss, after ending 2019 in the red by 95.6 million euros.

TAP reduced its operating fleet to 96 aircraft last year from 105 in 2019.

In December, the government proposed 2,000 job cuts by 2022 and pay cuts of up to 25% as part of a rescue plan for the airline, estimating TAP would need around 2 billion euros in extra funds guaranteed by the state to cover its financing needs until 2024.

Photo: A TAP aircraft at the Humberto Delgado airport . EPA-EFE/MÁRIO CRUZ

Related Stories