Parpública, the company that manages the state's stake in companies on behalf of the Portuguese taxpayer, has reported a loss of €367 million for 2014 due to rising debts at TAP and falls in Galp’s value.
In the previous year, Parpública managed to earn €792 million due to privatisation sell offs at the post office, CTT (€343 million) and energy distributor, REN (€142 million).
The Parpública annual report, submitted to the Securities Market Commission, shows that "the financial position of TAP Group has been characterised in recent years by an accumulation of losses, mainly determined by developments in the maintenance business in Brazil, which has been enough to offset profits in the TAP airline business."
Despite the government's bluster that TAP is a going concern and that it expects a full privatisation price to be offered by well-heeled investors, the underlying figures show the airline is in deeply in the red - to the taxpayers' detriment.
TAP still has assets in its routes, aircraft and property but its vulnerability to strikes, the loss making Brazilian maintenance arm and exposure to even the mildest competition will lead to low offers for the business, two of which are renowned Venture Capital groups with no track record in building airline businesses for the long term.
The make matters worse, according to Parpública which holds 100% of TAP, the year did not go well with regard to the core business of TAP, i.e flying passengers at a profit: "The situation reflected in the financial statements for the year 2014 continues this trend showing a generated loss, this time mainly in the 'core' business due to the late delivery of aircraft, the increased competition on routes to Brazil at World Cup time and the strike that occurred at the end of the year."
Parpública said that companies in the TAP group made a net loss of €85 million and the group's capitalisation fell by €520 million with the company increasing its borrowings by 18%, some €140 million.
TAP also had problems getting its money out of Venezuela and Angola, around €110 million was held up as at the year end.
As for the state’s holding in Galp, Parpública recorded an impairment associated with its bonds holdings estimated at €205 million.
Galp is a public company with freely traded shares and shares. The government has has no good reason to expose taxpayers to Galp's share price fluctuations.
