Sérgio Monteiro, the Secretary of State for Transport said yesterday that only through the privatisation of Portugal’s national airline TAP could the company access the capital needed to make it modern and competitive and allow the company to remain as the national flag carrier.
In his speech at an exhibition at the Air Museum in Sintra, Monteiro said the airline is and will always be a Portuguese flagship company, and said his goal is to create conditions and guarantees for the future of TAP and its workers.
This was in contrast to the demonstration at Lisbon yesterday to protest against the privatisation of TAP in its 70th year, a "crime that harms the national interest" according to the union leader Arménio Carlos.
Monteiro’s speech crystalised the conflict in the sell-off. The government wants to sell the airline but also to control its future by retaining a stake, a position that has caused discomfort for those lining up their bids.
Monteiro's aim of the airline ‘remaining a flagship company’ is not feasible when he no longer is at the controls.
The government wants a billion euros invested in the business and to keep job levels as they are. Workers’ are being offered a small shareholding in the privatised company but not enough for their unions to support the sell-off.
In the recent past Monteiro has crowed that the company is "worth more this year than it has been in previous years. Revenue per seat also is higher which means the company has been generating value," adding that when the airline is privatised it "could generate more if it had a shareholder with the ability to capitalise - the state has no capacity nor legally can do this."
Many wonder how the airline has been able to grow to the size it now is without access to capital which now seems to be denied to the state owned enterprise despite TAP being able recently to order more aircraft to replace an increasingly rickety stock.
The insistence from the government that the new owner keeps Lisbon as a hub and maintains politically expedient flights to lusophone countries, whether profitable or not, are just two more obstacles in the way of bidders.
Monteiro still can pull the sale but the political risks of doing so a second time are great and the sell-off remains on the Troika list of state assets to be disposed of.
As soon as government control is gone, the airline, which has been run for the benefit of its staff for years, will be subject to rationalisation, cost cutting, alterations to working practices and a general strategic overhaul if the new owner is to make it pay.
As this point the unions, unless legally gagged, inevitably will strike and the business will suffer but the government will have done its job of receiving money for a business that in its current form and under the current sale conditions, arguably is not worth buying.
