TAP is restructuring the size of its aircraft fleet and already has “the possible sale of six to eight aircraft (six A319s and two A320s) already underway.” In addition, it is also studying “the early return of aircraft under operating leasing and the possible sale of aircraft under financial lease”.
“The future development of the fleet will naturally be one of the structuring themes of the restructuring plan which is being drawn up” and which must be delivered to Brussels by December 10, specifies the group in the report on accounts for the first half of this year. Monday evening at the CMVM.
The TAP group triggers losses of 606 million euros over the half-year
Given the need to reduce the structure of the air carrier due to the effects of the covid-19 pandemic on travel, and to present a restructuring plan in Brussels due to state aid of up to 1200 million euros, the group claims to have already negotiated with Airbus and other entities to delay the delivery of new planes.
This agreement, specifies the report, was concluded and involves the “renegotiation of the expected delivery times for the period 2020-2022”, with “an impact on the level of postponement of commitments with the payment of payments before delivery to Airbus, thus that to obtain other commercial advantages in terms of protection of aircraft prices ”.
According to TAP, it was agreed to postpone the delivery dates of 13 A320neo aircraft from 2012-2022 to 2025-2027, as well as two A330neo from 2022 to 2024, which can be exchanged “for other models, to be evaluated on the basic market recovery and TAP’s needs at the time ”. These changes in delivery times allow the group to postpone a financial effort by reducing the investment planned for 2020-22 by around one billion dollars (854 million euros, at the current exchange rate).
As described in the now published half-year report, TAP has contracted with Airbus for the acquisition of 53 aircraft (including 39 A320neo and 14 A330neo) “to be received between 2018 and 2025”. In June, TAP’s fleet, still in the process of being renewed, consisted of 108 aircraft, of which 102 were operational (at the end of last year, the fleet consisted of 105 aircraft, up from the 75 that existed during the year privatization in 2015).
Ryanair took over the management of TAP again in August
In the second half of the year, TAP says four new planes will start operating (two A321neo LR, one A320neo and one A321neo).
124 million “unpaid arrears”
Also concerning the fleet, the accounts for the first half of the year were closed with 124 million euros of “unpaid arrears” to suppliers of leased aircraft. According to the report, TAP “has negotiated payment plans with some of its current providers until December 2020 and the extension of the payment deadline, resulting in an increase in accounts payable compared to December 2019”.
In the specific case of aircraft rental contracts, the group claims to have “developed negotiations with lessors in order to reduce the monthly value of equipment rents” and “to obtain consents for non-payment of rents and expansion. contractual conditions “,” keeping these negotiations in mind “, he explains,” the possible future need to reduce the fleet resulting from the restructuring plan “.
TAP wants to join Brussels with a new partner in the sights
Negotiations with these suppliers, says TAP, “are progressing at a good pace, and by the end of August approximately 60% of the fleet under an operating lease had already completed renegotiation or with the discussion concluded and in progress. formalization phase of the respective documentation, and no impact has yet been recognized in the balance sheet of June 30, 2020 ”.
606 million losses and turbulent future
In terms of financial results, the TAP group recorded a loss of 606 million euros. The overwhelming majority of the negative results come from TAP SA, with the air carrier suffering a loss of 582 million euros, about five times the value recorded in the same period of 2019 (and which was already a negative result).
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The group’s other 24 million euros of losses come from other activities, such as catering, baggage handling or maintenance. These numbers are the result of the partial shutdown in March and almost total in the following three months, as demand fell sharply due to the covid-19 outbreak.
The effects of the pandemic, says the TAP, “are expected to continue to be significant in the quarters to come”, which may be exacerbated in the event of further significant outbreaks of the virus and the imposition of further restrictions on mobility (until available) or simply because of the inability of economies to recover significantly and quickly from the adverse economic conditions so far caused by the pandemic, especially in terms of employment, disposable income and consumer confidence level ”.
The strengthening of the State in the group’s capital is still in progress, going from 50% to 72.5%, via the buyout of David Neeleman’s position, the “green light” from the Competition Authority still missing.