The government is raising its stake from 34% to 50% in the formerly state owned TAP airline as a result of negotiations with Gateway, which had 61% of the company's shares and will be left with 45%.
Gateway may reach 50% if it buys the shares allocated to the airline’s workers.
The government, through Parpública, has undertaken not to increase its shareholding to over 50% and will have the right to appoint the president of the company's board of directors and will have a majority of directors on the board.
The final agreement between Atlantic Gateway and the state will be signed by April 30th, after the Competition Authority and the National Authority for Civil Aviation, which still had not given its final opinion on the previous privatisation and debt restructuring of TAP.
Pedro Marques, the Minister for the Planning and Infrastructure, said that the State also intends to subscribe to €30 million of a €120 million bond issue.
The entrepreneur David Neeeleman, part owner of Gateway, explained that the memorandum of understanding provides "a debt restructuring of TAP, with the help of the Government."
The Prime Minister, António Costa, said on Saturday that negotiations between the Government and Gateway "were not easy", but had resulted in "a good partnership" stressing that the state does not intend to intervene in the daily management of the company.
"We are pleased that we will be partners," said Costa at the signing ceremony of a memorandum of understanding between the Government and Gateway, owned by Humberto Pedrosa and David Neeleman, which is selling sufficient shares to the State to enable taxpayers to own a 50% stake.
Humberto Pedrosa said he is comfortable with the agreement signed on Saturday morning, stating that the "goodwill and dialogue allowed the marriage."
The solution satisfies all parties and meets the election commitment, according to the Minister of Foreign Affairs, Augusto Santos Silva, who said that the outcome of negotiations between the Government and Gateway is advantageous for all parties and meets an election commitment.
"Above all, it is a solution that corresponds to an electoral commitment, a commitment of the Government, achieved by means which are preferred because they are the means of negotiation and compromise. It is a solution that has advantages for all parties, leaving the capital of TAP mostly in state hands," said Silva, who clearly failed maths at school.
Asked about the fact that TAP still has a large private owner of its shares, Pedro Marques countered that the critical question was always "to safeguard the strategic interests of the country" which are now guaranteed "forever, as they should be."
The Socialist Party welcomed the agreement. "TAP is back in the hands of the state, that was the purpose of the electoral programme to which the government was committed," said the vice-president of the Socialist Party, João Paulo Correia.
The MP added that besides the state having 50% of the company, the "strategic management of TAP will always be subject to the will and word of the state." This assumes the state-appointed directors all do as they are told by the government, rather than in the interests of the shareholders.
As for union comment, the leader of the UGT, Carlos Silva, said that Government has taken "the correct option to keep half of TAP, because then the airline serves the interests of the country and continues as flag carrier."
Former Prime Minister Passos Coelho said his PSD/CDS-PP coalition saw the privatisation process as important "because the state had no way to keep the company and had no money to be able to do so in order to defend jobs and the public service.”
The Left Bloc, pointing out the obvious flaw in this deal, said that if the government was serious about controlling TAP, then it should have negotiated a 51% stake.
According Left Bloc’s Heitor de Sousa, given the information available to date, "all the rights and decision-making powers remain in the hands of private capital and there is only an apparent recovery of public control."
Comments
A pyrrhic victory leaving the poor old taxpayer worse off for the benefit of the politicians' boasting. And TAP worse off for once again having a non-business oriented management.
A recipe for total disaster in due course.
What possible 'national security' benefit can there be in this?
Until Neeleman bails out saying he cannot make 'commercial decisions'. The ones that trim costs and increase profits - not the ones that get votes. The tough negotiations referred to would have been all about what guarantees and paybacks Neeleman gets - the multi-millions - when he goes. Leaving TAP where we all started 2 years ago.