TAP Air Portugal sharply reduces retrenchment target

TAP Air Portugal (TP, Lisbon) has announced a sharp reduction in the number of employees to be retrenched in line with its restructuring plan, currently still being assessed by the European Commission (EC).

In a statement shared on the Portuguese securities regulator (Comissao do Mercado de Valores Mobiliarios – CMVM), the airline announced it had begun proceedings for the collective dismissal of 124 employees by the last quarter of 2021.

However, this number is a 94% reduction from the original target of 2,000 retrenchments first estimated in the restructuring plan submitted to the EC on December 10, 2020.

The airline said the reduction was the result of “extraordinary efforts” implemented between February and June 2021 which included several phases of voluntary retrenchments, temporary emergency agreements with trade unions, and vacancies that could be filled at its regional subsidiary, Portugália Airlines (NI, Lisbon).

The 124 employees to be retrenched included:

• 35 pilots, compared to an initial estimate of 458;
• 28 cabin crew, compared to 747 initially targeted;
• 38 maintenance and engineering employees in Portugal, compared to an initial estimate of 450; and
• 23 head-office employees, compared to 300 as initially planned.

TAP’s downsizing plan was shared with employees in December 2020 and started in February this year, with the signing of emergency agreements with all unions in the context of TAP’s declaration as a Company in Difficult Economic Situation (SED), which was designed to be achieved preferably through voluntary measures.

TAP Executive President Christine Ourmières-Widener, said: “Our top priority has always been to promote and encourage voluntary measures with compensation higher than the legal requirements. We focused on running the process with dignity and respect for people, with all cases assessed on an individual basis. Overall, these extraordinary efforts have significantly reduced the initial downsizing target in the restructuring plan.”

“Some 15 months since the start of the pandemic, airlines (globally on average) are still flying at 50% capacity compared to 2019 levels with projections pointing to a particularly slow recovery in demand, with 2019 levels not expected to return before 2024/25, in an estimate that is still dependent on the future evolution of the pandemic and the effectiveness of vaccination,” the airline said. The restructuring plan currently underway aims to adjust TAP’s capacity and cost structure to the current operational reality and projections for the coming years.

“Unfortunately, for all the job cuts caused by the pandemic, in the airline industry and other sectors, we must make a firm commitment to the restructuring plan. The survival and sustainable recovery of TAP depends on the effective implementation of the plan”, added Ourmières-Widener.

The Portuguese state has control of TAP since last year, when it reached an agreement with the airline’s private shareholders to increase its presence in the capital, from 50% to 72.5%, and save it from bankruptcy. The airline last year received a EUR1.2 billion euros (USD1.4 billion) state loan approved by the EC in exchange for executing the restructuring plan.