Portuguese government defies court ruling, to privatise TAP

4th June 2015, Comments 0 comments

Portugal's centre-right government said Thursday it is pushing ahead with privatisation of national airline TAP despite a court ruling the previous day suspending the process due to an administrative irregularity.

Government spokesman Luis Marques Guedes said the cabinet had decided to maintain its privatisation schedule for TAP, and that it was defying Wednesday's ruling by Portugal's highest administrative court with "a resolution establishing the necessity of protecting the public interest" by going ahead with the sale.

The government resolution will be filed with the court, and "is justified by the urgency to continue the privatisation process, which will allow the rapid recapitalisation of the company," Guedes added.

The move now leaves the two bidders for TAP -- South American business magnate German Efromovich and American-Brazilian airline entrepreneur David Neeleman -- until the end of Friday to sweeten their initial offers and meet requirements outlined in the privatisation plan.

"Privatising TAP is essential in order to save the company and to maintain its current size," Prime Minister Pedro Passos Coelho said.

"Candidates must now make their best offers."

Neeleman -- who founded Morris Air, JetBlue and Azul Brazilian Airlines -- has pledged a capital injection of 350 million euros ($395 million) and the purchase of 35 new planes for TAP's fleet.

Efromovich, owner of Colombia's Avianca, has promised to inject 250 million euros into TAP, order it 38 new plans and transfer 12 others from his Avianca fleet.

Wednesday's interim suspension order arose from a case lodged by the "Peco a palavra" (I Demand the Floor) civic group complaining the government had failed to conduct a competitive bidding process for the job of evaluating TAP's financial situation by independent auditors.

It was the second time a court had cited technical irregularities in halting the laborious privatisation of TAP initially launched in December 2012.

The current drive has provoked protests by TAP staff, including a 10-day strike in May.

In an effort to garner employee backing of the privatisation process, both bidders have promised to distribute between 10 and 20 percent of future dividends to staff.

TAP suffered net losses of 46 million euros in 2014, has little cash and a debt load of nearly a billion euros.

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© 2015 AFP

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