Portuguese flag carrier TAP is going to receive an interim cash injection for €463 million (£397 million) by the Portuguese Government pending approval from the European Commission.
A €1.2 billion government loan to finance a restructuring plan
Just like all airlines around the world, TAP has been heavily hit by the collapse in demand caused by the COVID-19 pandemic and it has prompted a restructuring plan that will see a reduction if staff levels by at least 2,000 units and the dismissal of at least a dozen aircraft. The remaining 8,000 staff would take a 25% pay reduction to save another 600 to 1,000 jobs.
On 10 December 2020 the European Commission approved a €1.2 billion government loan consisting in €946 million as an interest-bearing loan with an option to provide another €254 million. The approval for the European Commission was conditional to the submission of a restructuring plan that is still not approved; therefore, the airline has requested a new interim financial aid to continue operating until the new plan can become operational, since it is not expected to have an answer from Brussels until the end of April.
“The Portuguese Government has submitted to the European Commission a notification for the granting of interim aid to TAP, SA, which will allow the airline to guarantee liquidity until the approval of the Restructuring Plan”, according to the statement released this Friday, March 12 and reported by the Portuguese media O Jornal Econòmico.
“Although TAP is in assistance under the Emergency and Restructuring aid – continues the statement – within the scope of the negotiation of the Restructuring Plan between Portugal and the European Commission, it was accepted that aid of a maximum amount of EUR 463 million could be notified”.
This loan will reduce the cash requirements outlined in the restructuring plan amounting to €770 million.