TAP Air Portugal’s Share Capital Reduced by Lisbon
The Portuguese government, through the state-owned assets oversight board (Direção Geral do Tesouro e Finanças – DGTF), has recently approved a significant reduction in the share capital of TAP Air Portugal (TP, Lisbon). This decision lowers the airline’s capital by two-thirds, from EUR 980 million (USD 1.05 billion) to EUR 313.6 million (USD 337.8 million), aimed at absorbing losses and restructuring its financial obligations, reported ch-aviation.com.
In a market note, TAP Air Portugal announced that the capital reduction will be executed by decreasing the nominal value of its shares from EUR 5.00 (USD 5.39) to EUR 1.60 (USD 1.72) per share. This strategic move is intended to enhance the airline’s financial health amidst ongoing challenges.
Out of the EUR 666.4 million (USD 717.7 million) reduction, EUR 323.4 million (USD 348.3 million) is designated to cover incurred losses, while EUR 343 million (USD 369.4 million) will relieve the government from its obligation to provide the last tranche of capital that was subscribed to in late 2022. In return for this adjustment, the government has committed to repay an equivalent amount by December 18, 2024, ensuring no additional liabilities are incurred.
This restructuring will facilitate TAP’s issuance of EUR 400 million (USD 430.8 million) in bonds during the 2024 calendar year. Finance Minister Joaquim Miranda Sarmento emphasized that this financial maneuver allows the airline to accelerate its restructuring timeline from 2025 to 2024, ensuring long-term financial stability while avoiding further state liabilities.
In parallel, Portugal’s sovereign wealth fund, Parpública, has appointed Bank of America as the financial advisor for the anticipated privatization of TAP Air Portugal, scheduled for 2025. The final equity to be divested remains undecided, but reports indicate strong interest from major players in the aviation industry, including IAG International Airlines Group, Air France-KLM, Lufthansa Group, and various Middle Eastern funds.
The valuation of TAP Air Portugal is currently under review. The Portuguese government aims to recover a significant portion of the EUR 3.2 billion (USD 3.4 billion) injected into the airline since its nationalization in 2020. Finance Minister Joaquim Miranda Sarmento stated in an interview with SIC Notícias that the government hopes to recover these funds, “if not at first, then over a long period.”
The decision to approve the capital reduction aligns with TAP’s long-term strategy to stabilize its operations and prepare for future growth opportunities. As TAP Air Portugal continues to navigate the complexities of the post-pandemic travel landscape, this capital restructuring is a pivotal step toward ensuring its viability and competitiveness in the aviation market.
In summary, the Portuguese government’s approval of TAP’s share capital reduction marks a crucial moment for the airline, enabling it to better manage its financial obligations and positioning it for potential privatization in the coming years. With strategic planning and financial adjustments, TAP aims to restore its status as a key player in the European aviation sector while addressing past losses and preparing for a more sustainable future.
Related news: https://airguide.info/?s=TAP+Air+Portugal
Sources: AirGuide Business airguide.info, bing.com, ch-aviation.com