International Airlines Group (IAG) has become the 3rd sector heavyweight to submit a statement of interest to Portuguese state company Parpública regarding the privatisation of TAP.
But the statement goes very much ‘back to basics’, stressing that “several issues need to be clarified before IAG can propose an investment”. This is the nub of this privatisation: the Portuguese state has spent a small fortune on TAP in recent years (well over the restructuring package of €3.2 billion) and there has never been any pretence about this money being recoverable.
Back in 2022, the then prime minister António Costa intimated the government would be lucky to sell the airline for €900,000 – and that was before the ‘share available’ was set at 44.9%…
Nonetheless, IAG (owner of British Airways, Iberia, Vueling, Aer Lingus, and LEVEL) makes a good fist of suggesting that “TAP will have significant potential within IAG (…) Our track record demonstrates how we invest to strengthening our airlines, benefiting customers, employees, local economies and shareholders.”
From tomorrow, November 22, Parpública, the company that manages the state’s holdings, has 20 days (until 12 December) to submit a report to the government describing the interested parties and assessing their compliance with participation requirements.
Within 20 days of the report being made available, interested parties who have demonstrated compliance with the requirements are invited to submit their non-binding proposals.
This second phase of the process, which will be divided into four stages, requires the proposals to include, among other things, the price offered for the acquisition of the shares and information on how the necessary financial resources to complete the purchase will be obtained.
Applications may be submitted by domestic or foreign operators, individually or in a consortium, provided they meet the defined criteria, including revenues in excess of €5 billion in at least one of the last three years and proven experience in the aviation sector.
Bids will also be evaluated based on fleet reinforcement, investment in maintenance and engineering, commitment to sustainable fuels, respect for labour commitments and vision for a possible strengthening of the shareholder position, in accordance with the recently published specifications.
As the government announced in July, the privatisation of TAP – which also includes Portugália, the TAP Healthcare Unit, Cateringpor and SPdH (formerly Groundforce) – “is expected to take about a year”, but knowing how things move in these processes will probably take longer.
In addition to IAG, Air France-KLM and the Lufthansa Group also formalised their interest this week.
As of this point, the interest intimated by a group of well-known Portuguese investors has not followed through.
Source material: LUSA
