Miguel Pais do Amaral has announced that he is putting together a deal to buy-up the airline that the government has been trying – with spectacular lack of success – to privatise for the last three years.
The former boss of Spanish group Prisa, which controls TVI, Pais do Amaral is a business-brain with a Midas-touch and a passion for fast cars. A descendant of the legendary Marquis of Pombal and the 4th Count of Alferrarede, he revealed his plans on the very day 168 of TAP’s pilots voted to strike and the national airline plunged into ever-deepening chaos.
“Our project isn’t about buying today and selling off in three to four years’ time,” the 60-year-old aristocrat with an MBA and degree in engineering told Diário de Notícias.
“Our strategic platform is simple: to maintain the strategy of the company, which has been of prudent, sustainable growth; maintain the management of the company, as we think the TAP president Fernando Pinto has been doing a good job and has years ahead of him to continue doing so. And, obviously, for this strategy to succeed, maintaining the hub (of the company) in Lisbon is pivotal. This will meet the government’s interests, which from an economic point of view – particularly since it sold ANA – Aeroportos de Portugal less than a year ago – is not interested in someone buying up TAP and diverting the hub from Lisbon to somewhere else.”
This “proposal therefore of continuity” – albeit by a private company – would also open the door to certain improvements when it comes to efficiency, added the former amateur racing driver with a string of championship wins under his belt.
For example, if TAP had the capacity for investment (“which it doesn’t have at the moment”), it could invest in a fleet of aircraft that consumed less fuel and “this way would improve profit margins and reduce costs”, he told DN.
“There are a series of projects that could make sense, and we think a private company could make them happen a great deal better than a public one.”
For now, Pais do Amaral would only reveal the name of his co-partner in the bid – another legendary name in business circles, former American airline boss and investor Francisco “Frank” Lorenzo.
74-year-old Lorenzo is most famous for his leadership of Texas International Airlines and its successor holding company Texas Air Corporation, through which he formed or acquired a number of major US airlines, including Continental Airlines. He has a reputation for being “tough on unions” but admired by airline strategists.
“I will not name any of the other investors,” 60-year-old Pais do Amaral explained. “But I can say that our proposal has been very well received by the investors that we have talked to. Front line investors in New York and London”.
“Our adviser is JP Morgan, a bank with a very strong track record with airlines – and we are very excited with our fundraising and in being able to present the government with a competitive proposal.”
It is uncertain how much Pais do Amaral and his business partner will be offering for the business that is currently in so much turmoil, but DN suggests “values of €1.6 billion” have been talked about – and Pais do Amaral has simply confirmed that the “necessary capital” to make the bid will be in place “in a short while”.
Meantime, the businessman, whose fortune ranks among Portugal’s 100 most rich, made light of TAP’s ongoing woes – calling them “operational problems” that are affecting the company “far less than the problems we are living in our financial market”.
This was a direct reference to the ongoing BES debacle, which TAP’s potential owner-in-waiting fears will affect both the airline and the country.
But, as Pais do Amaral gave his intriguing three-page interview, Portugal’s news media was making much of the troubles within TAP.
Risks cited as TAP uses “questionable” Ukrainian and Polish aircraft
One of the principal reasons given for the mounting number of flight delays and cancellations at TAP recently (there have been as many as 200 in the last two weeks) has been the long wait for six new aircraft – almost all of which have now arrived.
TAP boss Fernando Pinto has gone public on YouTube to try and allay bad press, giving assurances that the troubles would be over by mid-August – but pilots’ syndicate SPAC is not convinced.
SPAC president Jaime Prieto says there are far greater problems within the company and that personnel are not being dealt with fairly.
“TAP is not growing,” he told reporters. “It is trying to grow, whatever the cost.”
Aircraft maintenance – years ago considered the best in Europe – is now in operational chaos, he claimed, while Correio da Manhã wrote at the weekend that the airline, “without enough planes to respond to all the flights on its agenda, is now using hired planes to try and minimise the impact on passengers”. These planes come allegedly from Ukraine, Polish and Spanish air services.
“Pilots claim TAP is contracting external companies of questionable quality,” said the paper.
Only last week CM carried the “horror story” of a TAP plane that dropped part of its engine over Lisbon shortly after takeoff, and days later came the story of 166 passengers stranded in Maputo as one of the route’s planes developed technical problems which no one in the African capital seem able to deal with.
A mechanic had to be flown out from Lisbon, while passengers were put up in nearby hotels.
Expansion in Africa
TAP has been marketing itself lately as the “largest operator between Europe and Africa”.
Its five weekly flights between Lisbon and Maputo began last summer, and a few months later (October) the airline began running 71 weekly flights to 10 African countries and 15 airports.
As the Ebola virus threatens the African continent – and concerns are raised about the possibility of it crossing borders – TAP may be wondering whether it was really the right time to focus on widening the gateway to Europe.
