Portugal's Minister of the Economy has expressed surprise at the latest strike notice by TAP pilots and said he had no explanation except that "the pilots intend to put the government under a threat to halt the state company’s privatisation."
The minister, António Pires de Lima, was taken aback by the strike announcement that will see pilots down tools for ten days starting on May 1st, calling it inexplicable, and asking the union to reconsider its decision.
"Of course I'm surprised. We did not expect this position from the pilots' union which contradicts what was written and signed by representatives of the pilots trade union in the last week of 2014."
The labour stoppage was decided at a meeting attended by about 500 TAP pilots who mandated their union to issue a strike notice within the day.
Pires de Lima and the government find themselves in an embarrassing situation as the new reason for the strike is not management’s forgetfulness about earlier agreements to reinstate a longevity subsidy for longer serving pilots to be paid extra for their 'loyalty,' but the worrying claim that TAP workers now want a huge stake in TAP when it is privatised as early as the end of June.
The minister said the union does not want TAP privatised, but should it indeed be sold off, the pilots now are demanding 15-20% of the share capital.
Pires de Lima says this claim has never been agreed or written down and is not possible.
Those still interested in buying the troubled airline must submit bids before the May 15 deadline. Pires de Lima "hopes the pilots reconsider their position because if this strike takes place, it will greatly affect the economic life of TAP, and the sustainability of the company at a time when TAP needs to demonstrate vitality and cohesion."
Avianca, controlled by Germán Efromovich, now is not interested in taking part in the bidding due to TAP’s appalling debt position and the May 1st strike notice, but Efromovich might go it alone as he owns Synergy Group which itself owns Avianca and is not short of the necessary funds.
The board of Spanish airline Globalia re-confirmed that it had pulled out of the race in March due to the €1 billion+ debt on TAP’s balance sheet.
No new owner will want to contend with a pilots’ union that claims that is entitled to 20% of the company. The pilots claim they "contributed significantly to the enhancement of company assets" but feel that the Government intends ‘illegally’ to exclude them in the privatisation process.
The union claims that its members already have an agreement showing that they have "renounced significant economic benefits in exchange for an equity stake in the company in order to safeguard their future post-privatisation" but that "the government has not shown that it intended to honor this commitment."
"The government prefers to deliver the capital of a company which carries the national flag to foreign private interests, which in no way contributed to TAP’s construction and has no incentive to retain its base in the country in the long run, as shown in past privatisations,” reads today's union statement.
One month before final bids the situation is as follows; TAP reported an €85 million loss for 2014, is €1.06 billion in debt, the pilots do not want the airline privatised but if it is they want up to 20% of the equity, two more bidders have pulled out leaving Azul airlines, run by the Brazilian David Neeleman, front man Miguel Pais do Amaral acting for veteran US union crusher, Frank Lorenzo and three American private equity funds which will sell the airline on if they can earn a few million.
TAP's boss Fernando Pinto was brough in 15 years ago from Brazil specifically to prepare the company for privatisation. If anyone still thinks he has done a good job, they are part of a very select group.
Portugal's hotel sector already is feeling the affects of the planned strike as corporate and individual hotel bookings are cancelled due to uncertainty that TAP will be flying in early May.
The cost to TAP is estimated at over €5 million per strike day but the cost to the wider economy is high, if incalculable even if the government uses its special powers to ensure a minimum service.
Strike otr no strike, the damage already has been delivered by the pilots union and bids for TAP will be low, maybe even laughable, reflecting the loss making abilities of the management that has no firm grip on union relations and no clear plan apart from to sell the business at any cost.
