Taxpayers may have to shovel more money into TAP if there is a call to capitalise and finance the business which is at the start of an extensive fleet replacement programme.
State owned holding company, Parpública, controls the company with 50% of TAP’s shares, which aggravates "the financial responsibilities of the State.”
This is according to a Court of Auditors' report into the initial sale of a controlling share of TAP to Atlantic Gateway and the subsequent repurchase of enough shares to enable Parpública to control a majority shareholding.
The report stresses that the State "regained strategic control but lost economic rights," when it secured 50% of TAP and took "greater responsibilities in the capitalisation and financing of the company."
In short, the reprivatisation and repurchase of the airline, "did not lead to a more efficient outcome," in particular because there was "no consensus among public decision-makers" - as MPs were not involved.
The share dealings were judged to be above board, taking into account "legislative instability and successive contractual changes," and were, "effective in regaining control of a strategic asset."
The Court of Auditors' analysis focused on the sale of TAP, approved and carried out by the Pedro Passos Coelho coalition government, and on the repurchase of shares under the subsequent António Costa government.
The future sustainability of the business, especially after 2022, is questioned by Court of Auditors, which points out that the business plan does not reveal anything much beyond 2022, especially on profitability, and that there is a risk that the State will have to stump up more money.
The strategic plan for 2017-2022 shows positive indicators for equity - a reversal of -€525.2 million to +€88.5 million and profits from -€37.1 million to +€167.7 million.
According to the analysis, the risks underlying the repurchase of TAP outweigh the objectives that were achieved.
This repurchase of the control of TAP, completed a year ago, is hugely disproportionate as the State’s 50% gives it only a 5% share of profits.
Atlantic Gateway, on the other hand, reduced its shareholding from 61% to 45%, but increased its ‘economic rights’ from 61% to 90% in the great Socialist giveaway, engineered by the prime minister while in a coma.
The Court of Auditors said that one plus point was that, by selling the company which was in dire straits at the time, the purchaser recapitalised the company which improved Parpública’s accounts and thus fulfilled a commitment made to the Troika.
Two recommendations in the Auditors’ report are telling:
“Impose in contracts with external consultants, in particular in the context of reprivatisation processes, the delivery of all information necessary for the full understanding of the processes in question, including the details of the calculations, the basis and the assumptions, which must be evaluated by the State.
“To promote, within the scope of the State's participation in strategic companies, greater monitoring and control to ensure the necessary transparency on the sustainability of the business, including, in its strategic plan, adequate information with sufficient projections, as well as cost-benefit analysis and risk.”
The inference is that the above did not happen, ie there was not enough information to work with when the company was sold and that now, nobody can understand the strategic plan
