Agreement between State and private to save TAP is imminent, says Marques Mendes – Observer

An agreement is imminent between the State and private shareholders regarding public intervention in TAP to mitigate the effects of the Covid-19 pandemic, SIC commentator Luís Marques Mendes revealed this Sunday.

“The decision really is for hours or days. It will be this week, “said Marques Mendes in his weekly commentary on SIC’s Sunday news, noting that” if there is no capital injection into TAP “the company” has no money to pay salaries in July “.

According to Marques Mendes, “on Friday there was a meeting at the highest level between the Prime Minister, the Minister of Finance, the Minister of Infrastructure and the Secretary of State for the Treasury, in which the strategy was set to move forward immediately” .

At that meeting, “what was defined is that there is either an agreement or there is nationalization,” said Marques Mendes. “Either there is an agreement and everything is resolved, the State injects money, lends and reinforces its position”, or else, “only the nationalization scenario remains, which nobody wants”.

Marques Mendes pointed out that most of the scenarios on the table are not viable and that the solution for TAP would necessarily have to pass either through an agreement between the State and private shareholders or through a temporary nationalization of the company, by strengthening the position of the State in the airline – an option that would be “disastrous” for private shareholders.

According to Marques Mendes, scenarios such as the State backing down on requirements or letting the airline go bankrupt are not viable. Therefore, in the absence of an agreement with private shareholders, the only alternative would be to nationalize the company.

“Right now, negotiations are taking place between the Government and TAP’s shareholders,” stated Marques Mendes, stressing that the meetings are literally taking place this Sunday. “Friday’s impasse is being broken and the agreement is imminent,” he assured, noting that the agreement “may even undergo some shareholder change over time”.

The aviation sector was one of the most affected by the Covid-19 pandemic, as confinement and border closure forced the suspension of virtually all air transport globally. Several airlines were on the verge of bankruptcy and, across the world, different types of public support have been discussed with the aim of saving the companies that, for three months, had their fleets stopped.

Billion injection is only the first step that has to be accepted by private individuals. 3 certainties and 2 doubts in the plan to save TAP

In the case of TAP, the discussion about the counterparts for the injection of money – a maximum of 1,200 million euros already agreed with the European Commission – in the airline passed this week by Parliament.

Public aid will necessarily lead to structural changes in the company so that the State has a more prominent role in the management of TAP’s finances – for example, through the entry of an element appointed by the State in the company’s executive committee. But the details of the deal are not yet known.

Since 2016, the State (through Parpública) has owned 50% of TAP, the result of negotiations by the Government of António Costa with the Gateway consortium (of Humberto Pedrosa and David Neeleman), which took 45% of the carrier’s capital. The remaining 5% of the company is in the hands of workers.

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