Portugal reaches initial deal with TAP’s private shareholders

July 2, 2020

By Sergio Goncalves and Catarina Demony

LISBON (Reuters) – The Portuguese government said on Thursday it had reached an initial deal with private shareholders in ailing flag carrier TAP that would keep it in business but said it would nationalise the airline if commitments were not met.

“There is at present an agreement in principle with the private sector to make the intervention in TAP feasible,” cabinet affairs minister, Mariana Vieira da Silva said. “If this commitment is broken, the cabinet will meet to approve a decree to nationalise TAP.”

Vieira da Silva said it expected the final agreement to be sealed in the coming hours.

“We believe we will reach solid ground,” she said.

Earlier on Thursday, two sources with knowledge of the talks said the government and private shareholders were close to a deal giving the state a controlling stake while avoiding nationalisation.

The Portuguese state holds 50% of TAP and Atlantic Gateway, owned by Brazilian-American aviation businessman David Neeleman and Portuguese entrepreneur Humberto Pedrosa, has 45% of the airline, which suffered heavy losses in the coronavirus crisis.

One of the sources said negotiations had accelerated in the early hours of Thursday, leading to a draft agreement under which Neeleman would cease being a TAP shareholder, while Pedrosa would stay on.

Atlantic Gateway has until now resisted government plans to grant TAP a 1.2 billion euro ($1.35 billion) rescue loan that would entail more government control.

Like a string of other airlines, TAP asked for help in April after a collapse demand for travel due to the coronavirus pandemic forced it to suspend almost all of its nearly 2,500 weekly flights. The European Commission approved the rescue loan earlier this month.

A second source said the agreement was almost sealed, only missing a few details, namely regarding the exact increase in the state’s ownership and the final stake for Pedrosa.

Vieira da Silva said both side were currently “discussing technical, legal issues”.

To reach an agreement, the government managed to convince Brazilian airline Azul, founded and part-owned by Neeleman, to give up its right to convert a 90 million euro loan granted in 2016 into shares of TAP, one of the sources said.

TAP reported a first-quarter net loss of 395 million euros.

(Writing by Catarina Demony, editing by Andrei Khalip, Mark Potter and David Evans)