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At the press conference held at the Ministry of Infrastructure in Lisbon, Pedro Nuno Santos explained that the Government used IATA (International Air Transport Association) models to analyze recovery scenarios during the pandemic.
“We built our model based on that of IATA, but we started from a slightly more conservative scenario. We consciously took this option to be sure of what we are doing and reduce the risk of surprises in the future,” he said.
“We live today in a deep pandemic and economic crisis. The aviation sector is the most affected, worldwide. The drop in revenue is astronomical, it is expected that TAP will transport, in 2020, 28% of the passengers transported in 2019. It breaks above 70% of TAP’s turnover “.
According to the minister, the Government expects to have accumulated income losses until 2025 of 6.7 billion euros.
“Inevitably, an adjustment of this dimension requires that TAP also make an adjustment of its dimension so that the weight of public support is less. And so that we can have a company more adjusted to the reality that it will face, ”he said.
But “despite the Covid crisis”, “TAP was on a path that reduced its competitiveness against its competitors,” said Pedro Nuno Santos.
During the press conference, the minister stressed on several occasions that TAP has characteristics that make it “less competitive” compared to its competitors. Starting with its structure:
- “19% more pilots per plane than practically all of our competitors”;
- “28% more crew per aircraft than most of our competitors”;
- Our drivers earn more than some of our competitors, for example, those of Iberia ”.
However, he clarified: “The responsibility for TAP’s situation does not lie with its workers, but, obviously, that the labor costs faced by the company are a burden for TAP. They make it difficult for him to recover and his ability to compete with the competition in the rest of Europe. “
The plane
- The Government wants to reduce the size of the company, starting with the fleet: 108 aircraft for 88. In addition to reducing the number of aircraft to optimize operations, the type will also be changed. Some of the larger aircraft, the A330s, will be replaced by the “more energy efficient” A321 Long Range. The minister also says that the characteristics of these aircraft will allow TAP to obtain a competitive advantage over its competitors;
- “The truly profitable business for TAP is Hub“The government wants to bring passengers from Brazil, the United States, West Africa” and then distribute them to Europe “;
- Government dismiss “the maximum exit limit is 2000 workers”, but promised “to work with the unions to reduce this number of exits.” “We have identified a number of workers that are not strictly necessary for the operation. We are talking about people, with families, who are the first to be affected (…) but what we are doing is essential for the company to continue to exist and to recover part of the work that it cannot, unfortunately, at the moment “;
- In addition to reducing the number of employees in the company, the plan also Progressive salary reduction “up to 25%”, applied to workers who earn more than 900 euros per monthand “that saves between 600 and 1000 jobs.”
- “Up to 900 euros, no cuts are applied, and from then on a rate of 25% is applied to the upper part of 900 euros. That is, a worker who earns 1,000 euros has a 25% cut on 100 euros, which corresponds to a reduction of 2.5%. Then, gradually, as the wage level increases, the wage cut approaches 25% “;
- “These measures will allow savings by 2025 of 1,400 million euros. If we did not make this adjustment, we would have to add at least 1,400 million euros ”, says Pedro Nuno Santos.
- Suspension of corporate agreements.
The Government estimates that TAP will be able to start paying back state aid in 2025, but until then it may have to receive a value of more than 3.7 billion euros, according to the Minister of Infrastructure.
Pedro Nuno Santos said that by 2024 the company could need a value between 3,400 million euros and more than 3,700 million euros, also estimating that, in that year, it can already generate positive operating results.
“The worst that can happen is that we get to 2025 and have problems with TAP again,” he stressed, referring that this plan aims to carry out a restructuring in the medium term.
Clarifications
In the first part of his speech, the Minister of Infrastructure, Pedro Nuno Santos, took the opportunity to clarify some “misunderstandings” in response to news and opinion articles that he considered “erroneous”. The minister guaranteed that, in the absence of the first injection of capital from the state, the flag company would have declared bankruptcy.
“The pandemic crisis accentuated the degradation of the accounts, put TAP at risk of survival (…) We do not forgive the private sector for injecting money into TAP. The private did not have money or desire to inject in TAP. If the State did not do what it did, TAP would fail“, he clarified.
David Neeleman “was entitled to complementary payments of 224 million euros”, that is, “when the State became the majority, the private sector would ask for 224 million euros,” he said at another point.
“The State was not going to accept, it was going to dispute,” he said, highlighting that the most acceptable solution was to pay 55 million euros to the shareholder. I mean, he added, “David Neeleman agreed to lose 169 million euros“.
The government handed over TAP’s restructuring plan to the European Commission on Thursday.
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