Portugal has won approval from the European Commission to provide a €1.2 billion ($1.4 billion) state rescue loan to its national carrier TAP to address “immediate liquidity needs”.
Due to its “financial difficulties”, TAP Air Portugal is not eligible to receive support under the Commission’s temporarily relaxed state-aid rules. Instead, the government loan was approved under the bloc’s rescue and restructuring guidelines, which exist to “support companies in difficulty” as long as support measures are “limited in time and scope, and contribute to an objective of common interest”, says the Commission.
“This €1.2 billion Portuguese rescue aid will help TAP Air Portugal face its liquidity needs and pave the way for its restructuring to ensure its long-term viability,” states EU competition chief Margrethe Vestager.
In addition to helping avoid “disruptions for passengers”, the aid will “indirectly” benefit Portugal’s tourism sector and economy as it recovers from the effects of the Covid-19 pandemic, adds Vestager.
TAP has agreed to repay the loan within six months or submit a restructuring plan demonstrating the “long-term viability of the company”, says the Commission.
The airline made a second-half net profit of €14.1 million last year, reversing a loss of €28 million in the same period of 2018, but has been hit hard by the pandemic and grounded a large part of its fleet in March.
TAP has 86 Airbus aircraft, 75 of which are currently in storage, Cirium fleets data shows. The airline has a further 36 Airbus jets on order.