June 23, 2020 / 12:26 PM / 13 days ago

Portugal's TAP confident EU will approve restructuring plan

LISBON (Reuters) - Portugal’s flag carrier TAP is confident the European Commission will approve a restructuring plan that would allow the airline to avoid repaying a government-backed loan, its chief executive said on Tuesday.

FILE PHOTO: TAP planes are seen at Lisbon's airport during partial lockdown as part of state of emergency to combat the coronavirus disease (COVID-19) outbreak in Lisbon, Portugal April 1, 2020. REUTERS/Rafael Marchante

In April, TAP asked for help as the company, which usually operates around 2,500 flights per week, was forced to suspend almost all of them as demand for travel collapsed in the coronavirus pandemic.

Earlier this month, the European Commission approved Portugal’s plan for a 1.2 billion euro ($1.4 billion) rescue loan for TAP.

Rescue aid can be granted for a maximum of six months and authorities have committed that TAP will reimburse the loan or submit a restructuring plan in that time.

“We believe it is possible to send a restructuring plan to the European Commission that is accepted because we believe TAP has a viable business model,” CEO Antonoaldo Neves told a parliamentary committee.

“TAP has new planes, it has an extraordinary team,” Neves added. “Now it will be a long and hard recovery.”

TAP tried to resume some of its international operations last month as lockdown measures were slowly being lifted but, with little demand, the company took a step back.

“It is very difficult to predict the demand we will have in coming months,” Neves said. “We have done a process in which we place flights and withdraw flights, testing market demand.”

TAP was partly privatised in 2015. Brazilian-U.S. airline entrepreneur David Neeleman holds a 45% stake, and the state 50%, with TAP employees holding the remaining 5%.

TAP ended last year with its best ever cash position despite a net annual loss of 106 million euros, but it has incurred heavy losses in recent months.

“The country must unite to save TAP from the pandemic,” Neves said.

Reporting by Catarina Demony and Sergio Goncalves, Editing by Andrei Khalip and Mark Potter

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