Lisbon wins EC approval for €2.66bn TAP aid
The European Commission has given its seal of approval to EUR2.55 billion euros (USD2.88 billion) worth of restructuring aid for TAP Air Portugal (TP, Lisbon), as well as EUR107.1 million (USD120.8 million) to compensate it for damages resulting from the coronavirus pandemic during the second half of 2020.
Portugal’s finance minister, João Leão, had already said earlier this month that he expected discussions with the commission on the restructuring plan to result in approval by Christmas. The Portuguese government had also raised its shareholding in the ailing carrier’s holding company TAP SGPS in July 2020 from 50% to 72.5% after buying aviation entrepreneur David Neeleman’s stake in the company.
“The approved restructuring plan for TAP will ensure the airline’s path towards long-term viability,” European Competition Commissioner Margrethe Vestager explained in a statement on December 21.
She added that “the significant public support” will come with safeguards to limit distortions of competition – in particular TAP making up to 18 slots a day available at congested Lisbon airport, “where TAP holds significant market power,” to “a competing carrier.”
This will give the competitor the chance to expand their activities at this airport, “ensuring fair prices and increased choice for European consumers,” Vestager said. The first call for proposals on this sale will take place ahead of the Winter 2022-23 season.
The slots are an issue Ryanair (FR, Dublin Int’l) has raised in its vocal campaign against the state protection of TAP Air Portugal.
The flag carrier will also need to split its businesses into separate airlines TAP Air Portugal and Portugália Airlines (NI, Lisbon) – both of which will be supported and restructured – the commission said, as well as divest non-core assets during the course of the restructuring including subsidiaries in the maintenance arena in Brazil, catering, and ground handling.
In addition, TAP will be banned from making any acquisitions and “will reduce its fleet until the end of the restructuring plan,” the commission said.
The European Commission recounted that Portugal had formally notified it about the planned restructuring aid on June 10, 2021, prompting it to open an in-depth investigation on the matter on July 16. On the same day, it re-approved EUR1.2 billion (USD1.36 billion) in initial state aid in favour of the carrier following an annulment of the decision at the European General Court.