As if the government needed any more bad news from TAP, the latest state owned company to be lined up on the privatisation runway.
Today’s news that TAP needs €200 - €250 million of short term funding, ‘just to see it through’ will depress ministers further as they take on the unions over holiday strike action.
The emergency funding request for the state owned airline cannot have come as much of a shock to the bank manager who will have been following the company’s financial descent as ticket sales dry up and refunds are made for those caught in the four days of holiday strikes.
Caixa Geral de Depósitos is the main banker to TAP but the funding needed to tide over the airline until it is privatised will have to be arranged by a consortium as, for one thing, Caixa Geral also is state owned and the government will have EC restrictions on supporting state owned businesses in this way.
TAP already has looked at a sale and leaseback deal for its fleet of A340 aircraft but the costs involved were seen by the TAP board as not worth the outcome, a decision it may now be regretting.
The official reason for the loan is "to relieve the group treasury, which is fragile, at a time when the privatisation programme threatens access to credit and hinders relationships with financial institutions."
The real reason is the hole that has appeared in the company's cash flow due to a series of damaging strikes, technical issues and cancelled flights throughout 2013 as the unions do their level best to disrupt the privatisation programme and make the airline as financially strained as possible without driving it to the point of insolvency.
Comments
this Ed. is a bit of an understatement. TAP actually has received a billion in subsidies and support that will need paying back.
Not of course by any new owner ... just those few tax payers out there.
190,000 Portuguese businesses caught not correctly paying tax ... around half regularised.
Yeah ... right. The old 'keep back one till roll' routine. Feed the taxman 3 of your 4 monthly till rolls. Then some damned customer does a Factura da Sorte with his receipt from the missing roll.
Regularised. Not to worry Snr. Tax Inspector! We have it ! This missing one was found just the other day at the back of a drawer.
It does make clear the poor standard of business accounting here. If a business regularly supplies x till rolls; then gets caught out. How many others has it been hiding over the years ?