The Portuguese government has failed to reach an agreement with shareholders of the national airline TAP Air Portugal over a 1.2 billion-euro (1.35 billion U.S. dollars) state rescue loan and has decided to nationalize the flag carrier, the local newspaper Expresso reported on Tuesday.
According to the paper, the management of Atlantic Gateway, the company that controls 45 percent of TAP, had rejected the government’s conditions under which the loan was to be granted, which brought the negotiations into a deadlock.
The European Commission (EC) approved, on June 10, a “Portuguese government emergency aid” to the airline with predetermined conditions for reimbursement.
According to the EC, TAP was already in a “weak financial situation” before the COVID-19 pandemic, but the shutdown of flights caused an additional loss of 395 million euros in the first quarter of 2020.
One of Atlantic Gateway’s administrators, David Neeleman, has demanded that a clause should enable private shareholders to recover the money they had injected into TAP in case of nationalization, but there was no agreement on the amount to be refunded.
Portuguese Minister of Infrastructure Pedro Nuno Santos confirmed Tuesday morning in a speech in parliament that he expected to find an “agreed solution that will guarantee peace for TAP and avoid future litigation,” but said he was “prepared for everything.”
“We are not going to give in on our terms and we are prepared to intervene and save the company. We cannot afford to lose TAP, which helps to maintain and create much more than its 10,000 workers,” he said.
“We are talking about one of the biggest exporters, which brings half of the tourists to Portugal. It buys 1.3 billion euros (worth of goods and services) from national companies. It pays more than 300 million euros in taxes and contributions, plus the millions it brings to the country. It would be a disaster for the country to lose TAP,” argued the minister.
Nuno Santos said that “the reversal of TAP’s privatization was not the ideal model, it was the possible model,” adding that it was an “uncompromising and firm defense of the national interest”.
The nationalization project of the airline is now going to be considered by the president of Portugal, the Expresso newspaper said.