Portugal Wants More Power Over TAP After Bailout

(Bloomberg) --

The Portuguese government wants more control over the stricken airline TAP SGPS SA in exchange for a rescue loan of as much as 1.2 billion euros ($1.4 billion), Expresso reported.

The government, which already controls 50% of TAP, is in talks with private shareholders about the loan and should get a response early next week, the weekly newspaper said, without identifying its sources. The national flag carrier has immediate liquidity needs after halting most operations due to the coronavirus outbreak, which has hit airlines around the world.

The government already controls half of the 12 seats on the board and appoints the airline’s chairman. But TAP’s private shareholders effectively run the airline’s day-to-day business as they appoint the remaining six members of the board, including the chief executive officer and the two other members of the executive committee.

Portugal Sees TAP Getting Up to $1.1 Billion in Aid This Year

The airline’s governance model would need to be changed for the board of directors to have more power in the daily management of the carrier as the government doesn’t plan to appoint a representative to TAP’s executive committee, Expresso said.

The European Commission approved Portugal’s loan plan, saying the airline already faced financial difficulties before the virus outbreak. Airline entrepreneur David Neeleman and Portuguese investor Humberto Pedrosa jointly own 45% of Tap through the Atlantic Gateway venture.

©2020 Bloomberg L.P.