EU backs 2.5 bn euro restructuring of TAP Air Portugal

The European Commission on Tuesday approved a 2.55 billion euro restructuring plan for TAP Air Portugal, funded by the state, the airline’s main shareholder.

Brussels also cleared a payment of 107.1 million euros in compensation to the airline for losses suffered during the Covid crisis in the last half of 2020.

The restructuring package would “ensure the airline’s path towards long-term viability”, said EU competition commissioner Margrethe Vestager.

In return for the aid, TAP had to agree to free up slots at Lisbon airport for other airlines, including low-cost competitor Ryanair.

TAP’s financial problems were exacerbated by the coronavirus pandemic, which forced many countries to lockdown and left many airlines unable to operate normally.

The airline had already received a 1.2 billion-euro bailout to cope with those losses.

Last December, it submitted its restructuring plan that included cutting staff, lowering salaries and reducing its fleet.

But the Commission made it clear in its statement on Tuesday that the airline would also have to split from Brazilian subsidiaries that handle maintenance, catering and baggage.

tsc/jj/jxb