Photographer: Mario Proenca/Bloomberg

Portugal Reverses TAP Privatization Plan, Raising Stake to 50%

  • New government pays EU1.9 million to JetBlue founder's group
  • Portugal says it doesn't plan to intervene in TAP's management

Portugal will raise its stake in the national airline TAP to 50 percent, Prime Minister Antonio Costa said, partially reversing the previous government’s deal to sell a controlling stake to private investors just months ago.

The state will pay 1.9 million euros ($2.2 million) to the Atlantic Gateway group, which includes JetBlue Airways Corp. founder David Neeleman and Portuguese bus tycoon Humberto Pedrosa, to increase its stake from 34 percent. Gateway’s stake in TAP will fall to 45 percent from 61 percent, though it may buy another 5 percent stake if it’s not purchased by the airline’s staff, according to a statement at a press conference in Lisbon on Saturday.

Antonio Costa speaks during the signing of the national airline TAP agreement

Photographer: Patricia De Melo Moreira/AFP/Getty Images

"The government doesn’t plan to intervene in the day-to-day management of TAP," Costa said at the press conference. "The government plans to guarantee that TAP’s strategic vision is respected and that TAP will always ensure the connection of Portugal and of the Portuguese to the world."

Atlantic Gateway completed its purchase of 61 percent of the Lisbon-based carrier in November, just days before the previous center-right government was ousted by Costa’s Socialist administration. The group agreed to invest 348 million euros into the debt-laden airline as it acquired its controlling stake. Costa said on Dec. 18 that his government planned to retake control, with or without the agreement of the new owners.

‘Critical’ Decision

"There was never a conflict between the government and those that bought TAP," Costa said. "There was a conflict between political options that were chosen in Portugal."

Under the new agreement, the Portuguese state will appoint TAP’s chairman, while Gateway will name three executive board members, including the chief executive officer. The state and Gateway will each appoint six board members. Both parties also agreed to maintain TAP’s headquarters in Lisbon and the airline’s links to Portugal’s islands, Africa and Brazil.

TAP’s main attraction is 77 weekly flights from Portugal to Brazil. The company also offers almost the same number of services to Africa and operates 43 routes within Europe. The airline posted a loss of 85.1 million euros in 2014, up from a 5.9 million-euro loss the previous year, and had 1.06 billion euros of debt at the end of 2014. It has yet to report its 2015 results.

"I’m not saying here that I am happy," Neeleman, who initially opposed the government’s plans, said at the same press conference. "This company needs to be saved. It’s critical, because it’s burning too much money and decisions can’t be political. They need to be what is best for the company."

Portugal agreed to sell TAP in 2011 as a condition of the aid it received from the International Monetary Fund and the European Union.