The Portuguese government announced on Thursday, that it reached an agreement with TAP Air Portugal private shareholders, to hold 72.5% of the airline’s capital for 55 million euros, after a resolution by the Council of Ministers recognizing the public interest of keeping the airline in operation.
With the move, the State has increased its participation in the national flag carrier from the current 50% stake to 72.5 %, an additional 22.5%.
“In order to avoid the collapse of the company, the government has chosen to reach an agreement for 55 million euros,” the Minister of Finance, João Leão, announced in a joint press conference with the Minister of Infrastructure and Housing Pedro Nuno Santos.
Nuno Santos added that the government will not manage TAP, and that it will appoint a private company to search the international market for a qualified team to administer the airline.
“We will carry out a selection process by hiring a company that, within the scope of its activity, will look for a qualified team in the international market to manage TAP,” Nuno Santos stated, stressing that TAP is too important for the country, therefore too big to fail.
According to the agreement, the State now holds 72.5% of the airline, businessman Humberto Pedrosa holds 22.5%, and the workers keep 5%.
TAP Air Portugal has been under stress, struggling to survive the economic impact of COVID-19. As a result, it has requested State aid to secure its future, appealing to the government for a bailout. In March, due to the collapse in travel, TAP temporarily laid off around 90% of its employees, suspending its operations almost entirely.
Ryanair said on Friday it will challenge the Portuguese government’s investment in ailing flag carrier TAP in the European courts, arguing that it is “illegal state aid”.
“Ryanair will challenge this illegal state aide to TAP in the European Courts and will continue to campaign for a level playing field in Portugal for all airlines,” Ireland-based Ryanair said in a statement.
