Portugal’s Prime Minister Pedro Passos Coelho has chosen to keep quiet about the TAP privatisation suspension but did make several comments today including that the government will come up with a well-reasoned counter argument to yesterday’s Supreme Administrative Court decision.
The government line is that the sale of TAP is ‘in the public interest’ and the PM said to journalists today that he hopes that the privatisation does not get derailed as “the process of privatisation is essential to save the company."
Pedro Passos Coelho explained that "the court has not yet taken a final decision on this matter" as the judges now need to hear the government’s side of the argument.
The privatisation was suspended yesterday because the government has failed to offer for tender the job of evaluating the final bids. According to its own rules, two independent bodies should have been contracted to look at the financial and strategic aspects of the bids and only after a public tender for the work.
The deadline for improved bids is this Friday afternoon when David Neeleman (Azul) and Germán Efrómovich (Avianca) may or may not put in higher offers for TAP.
Whether the two businessmen will raise their bids remains a hot topic as today Brazil’s government with an interesting sense of timing decided to suspend its Regional Aviation Programme, launched in 2012 to support the development of domestic air links and infrastructure.
This programme has been subsidising Neeleman (pictured) and Efrómovich's Brazilian operations to the tune of €2.3 billion in support payments for short and uneconomic domestic routes as well as developing and upgrading Brazil’s airports.
In February 2015, David Neeleman said that if the Brazilian government wanted to keep these regional flights, then his airline Azul "needs subsidies," which he has had, until now.
Without this local subsidy in Brazil, the cash position of the two entrepreneurs companies in Brazil will be affected.
This will have an impact on the investment each businessman will be prepared to sink into the troubled TAP.
