The European Commission has cleared a deal which will see Portuguese flag carrier TAP Air Portugal remortgage four Airbus A340s to secure a bank loan. The €40 million ($35.5 million) deal with Bank of Tokyo Mitsubishi was much needed after the collapse of Swissair ended hopes of a capital injection from the SAirGroup.

Brussels says the carrier's plans to use the aircraft to secure additional financial structures "do not constitute state aid", adding that the move will not alter the terms of existing loans, and "no new state resources will flow to TAP". TAP expects to make a net loss of €5.3 million this year, compared with €53.2 million in 2001.

Meanwhile, the newly elected government intends to go ahead with a privatisation of the airline, in which SAir was to have taken a substantial minority stake. But the left/right coalition of Social Democrat and Popular Party coalition has shelved plans for a new Lisbon International Airport. Prime Minister Jose Durao Barroso has cut big ticket public investments in an effort to prevent the country breaching the 4.5% of gross domestic product European Union limit on public expenditure.

Source: Airline Business