The Portuguese government's draft restructuring plan for ailing flag carrier TAP projects that it may need approximately €2 billion of additional state aid by 2024, while thousands of jobs will be terminated to turn the airline around, three sources have said.
One of the sources familiar with the document told Reuters that it envisages that TAP, which had a loss of €701 million in the first nine months of 2020 as the coronavirus pandemic slashed its passenger numbers by 70%, should break even in 2025.
The plan still needs to be approved by the European Commission. If rejected, TAP would have to immediately repay a €1.2 billion rescue loan agreed earlier this year, which could lead to its insolvency.
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TAP asked for state aid in April after suspending almost all of its 2,500 weekly flights.
One source with knowledge of the proposed plan said that its base scenario envisages an additional €2 billion in public or state-guaranteed loans until 2024.
A second source said that such aid is expected to reach approximately €1 billion as early as next year, and the state is expected to inject a further €400 million in 2022 and then approximately €300 million in each of the following two years.
The Ministry of Infrastructure and TAP declined to comment.
Job Cuts, Wage Cuts, Fleet Reduction And Route Closures
TAP, which had more than 10,000 workers in 2019, has already cut 1,200 jobs, and 400 more employees will leave the company by year-end.
But the second source said that at least 2,000 additional workers will be made redundant, including 500 pilots, and those still employed will face wage cuts of up to 25%.
A third source said that the plan projects a reduction of TAP's fleet to less than 90 aircraft from just over 100 now and the closure of approximately a quarter of its routes.
Before the pandemic, TAP flew to more than 90 cities in 30 countries.