June 30, 2020 / 12:01 PM / 3 days ago

Talks on rescue loan for Portugal's TAP airline ongoing, minister says

LISBON (Reuters) - Portugal said on Tuesday it was negotiating with the private shareholders of airline TAP on a proposal to support the company and was prepared for all scenarios, following a media report the state was gearing up to nationalise the flag carrier.

TAP’s private shareholders Atlantic Gateway and the government have failed to reach an agreement over a 1.2 billion euro ($1.34 billion) state rescue loan for the airline, weekly newspaper Expresso reported.

Portugal holds 50% of TAP and Atlantic Gateway has 45% of the airline, which has suffered heavy losses due to the coronavirus crisis.

“At this moment, we are prepared for everything,” Infrastructure Minister Nuno Santos said in a parliamentary hearing on Tuesday. “We are still going to submit a proposal to our private partner and I hope it will be accepted.”

Expresso also said the government would submit a decree to the country’s president to nationalise TAP.

Santos said it would be an “economic and social disaster” if Portugal lost TAP. He said it was important to “restructure” TAP but did not confirm or deny if the airline would be nationalised.

“Almost 90% of tourists arrive to Portugal by air and half of them arrive by TAP,” Nuno Santos said. “We cannot afford to let TAP fall.”

A TAP spokesman said the company was not aware of the move but that a general assembly of shareholders was underway.

TAP reported a first-quarter net loss of 395 million euros mainly due to coronavirus lockdowns that halted most air travel.

Around 90% of TAP’s employees were temporarily laid off in April as the company suspended most of its 2,500 flights per week.

The layoffs were extended until at least July 30 after an attempt to resume some of TAP’s international operations last month fell flat due to low demand.

Reporting by Catarina Demony and Sergio Goncalves, Editing by Andrei Khalip and Jane Merriman

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