LISBON, June 24 (Reuters) - The new owners of Portugal’s recently privatised flag carrier TAP expect the loss-making airline to return to profit next year thanks to new routes to Brazil and the United States and an investment of up to 800 million euros ($895 million).
The Atlantic Gateway consortium made up of American-Brazilian aviation tycoon David Neeleman and Portuguese bus company owner Humberto Pedrosa will focus on boosting revenues rather than cost cuts, the two entrepreneurs said on Wednesday.
“This year it will be difficult to have a profit because of the crisis in Brazil and other things. But next year, when we’ve implemented our changes, we expect to have a profit, and post profits going forward,” said Neeleman, who is the CEO of Brazil’s Azul airline and the founder of U.S. JetBlue.
He said TAP would add 10 new destinations in the United States, where it now has two - Miami and New York, and eight to 10 destinations in Brazil, where it already has 11. Many Europeans transit through Portugal to fly to Brazil because of the large amount of slots TAP holds on flights there.
The consortium has promised to buy 53 new Airbus aircraft for TAP, which operates a fleet of 61 Airbus planes that is in need of renewal. Neeleman said new orders would include 14 wide-body A330s and 39 narrow-body A321 aircraft.
TAP had a net loss of 46 million euros last year, hit by personnel strikes and fuel costs, after a profit of 34 million euros in 2013.
TAP’s Brazilian CEO Fernando Pinto said the start of the year was worse than expected for TAP, but there were signs of improvement thanks to strong good occupancy rates at the start of the summer holiday season.
The new owners who won the privatisation tender on June 11 to acquire a 61 percent stake in the heavily-indebted TAP, will make a capital injection worth 345 million euros in the company as well as 250 million in pre-delivery payments for aircraft in 2016 and 2017.
Because of European Union state-aid rules, the government could not inject capital into TAP and opted to sell it.
“The total investment package is 600 million euros, but it could go up to 800 million euros,” Neeleman said, without elaborating. The partners expect to obtain funding with the Brazilian development bank BNDES.
The sale contract encompasses the possibility of an initial public offering of TAP shares in the future. Neeleman would not say when that may take place, adding that the consortium had enough cash flow to proceed without issuing shares for now. ($1 = 0.8936 euros) (Writing by Andrei Khalip; Editing by Alison Williams)
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