João Cantiga Esteves, the chairman of the monitoring committee for the privatisation of Portugal’s state owned TAP has said that the airline is in a desperate financial state and that it is surviving on a day-by-day, minute-by-minute basis.
Esteves said today that the airline lives in complete financial despair, owing €2 billion with just €2 million in free funds with which to pay its bills.
The most urgent matter is for the re-capitalisation of the business and Esteves admitted that "what is at stake is the survival of the company."
The chairman sees the primary role of any new owner as one of arranging to refinance the business and this will be the main criteria when selecting the new buyer, if there is to be one after today’s crippling news.
The financial facts behind Esteves' comments today will be of no surprise to the companies involved in the bidding process but his unnecessary statements today should serve to depress further any offer prices, or, more cunningly, be a way of preparing the public for a sale price way below expectations.
The ranking of sale criteria now sees re-capitalisation in the number one spot, followed by the price offered and the accompanying strategic plan.
For the first time the list does not state a date until which Lisbon must be maintained as the company’s hub and head office, a detail that unions will be swift to pick up on.
The government today boldly described 'the strengthening of the economic and financial capacity of TAP’s assets and the re-capitalisation plan needed as a condition for its sale' as if these somehow were positives. They have yet to happen and the sale of TAP does not have to go ahead, especially if the bids are embarassingly low or the accompanying strategy poor.
Esteves highlighted also the ‘lessons learned’ from the botched privatisation process in 2012 and considered that the current sale process is faultless and not plagued by any of the problems that caused the previous aborted take-off.
The chairman concluded that "the proposals will have to be very specific on strengthening capital, also that any offers received will be binding, which did not happen in 2012."
