TAP plans to lift its annual passenger count to 20 million within five years from about 16 million now as it adds 70 new planes to expand its network and save on fuel.
Sunday 24, March 2019
(Bloomberg) --Portuguese airline TAP, partially privatised by the government in 2015, said it’s preparing for an initial public offering (IPO).
Antonoaldo Neves, the Chief Executive Officer of TAP, said that the carrier, part-owned by David Neeleman, is readying itself for a sale but cannot be sure when that might be.
“We’re preparing the company so that when TAP has to do the IPO it will carry out the IPO,” he said. “It’s very hard to determine the timing,” added Neves.
Neves declined to specify how much of TAP might be sold off, while adding that it’s normal for companies to offer 15 to 30 per cent of their shares in a flotation.
The carrier posted a loss of EUR 118 million ($133 million) last year from a profit of EUR 21 million in 2017 as it booked restructuring costs, signed union deals and saw its expansion held back by delays at Airbus.
Neeleman, who owns a 45 per cent stake in TAP through the Atlantic Gateway venture with Portuguese investor Humberto Pedrosa, said at the briefing that the airline partly needs to float because of its EUR 600 million debt burden with banks, though it generates sufficient cash to meet its obligations.
“To strengthen the company and to make sure we’re covered for the good and the bad years, we have to at some point in time go public,” Neeleman added. TAP may be in shape for an IPO next year, though that doesn’t mean it will go ahead with a sale in 2020 as the market needs to be right, he added.
Earnings are being held back by issues with the fleet, Neeleman said, citing the late delivery in November of the first Airbus A330neo, for which TAP was the global launch customer, and A321neoLR narrow-bodies. Next year should be better as more planes arrive, he said.
Portuguese state holding company Parpublica owns 50 per cent of TAP, according to the carrier’s website.