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UPDATE 1-Portugal warns Ryanair will face consequences for opposing TAP aid

(Adds Ryanair’s comment)

LISBON, May 26 (Reuters) - Ryanair’s relations with Portugal will suffer because of the Irish airline’s campaign to try to block state aid for struggling Portuguese rival TAP, Portugal’s infrastructure ministry warned on Wednesday.

“Due to systematic hostile attacks on TAP, Ryanair should not expect an attitude of cooperation,” the ministry said in a strongly worded statement after minister Pedro Nuno Santos met Ryanair Chief Executive Michael O’Leary earlier in the day.

Last week, the European Union’s second-highest court upheld Ryanair’s fight against a 1.2 billion euro ($1.5 billion) rescue loan TAP received in 2020 from the state, with the European Commission’s blessing, on the grounds that the commission failed to justify the huge cash injection.

The commission has said it is studying the ruling before considering its next steps.

“It is clear to everyone that Ryanair is trying to take advantage of a difficult situation caused by a pandemic to attack a group of European companies of central importance for several (EU) member states,” the ministry said.

In an emailed statement, O’Leary said the meeting with Santos was “interesting although pointless,” and rejected the minister’s accusations.

“We condemn his false claims over recent days that Ryanair is waging a commercial war, when this is called competition. ... We again call on minister Santos to stop wasting taxpayers’ money on TAP,” he said.

If Brussels rejects Lisbon’s restructuring plan for TAP, which involves a proposed 2,000 job cuts by 2022 and pay cuts of up to 25%, TAP would have to immediately repay the rescue loan, which could lead to its insolvency.

TAP reported a record 1.2 billion euro loss last year amid the COVID-19 pandemic, but the ministry said the airline was “a strategic and structuring investment for Portugal.”

$1 = 0.8204 euros Reporting by Sergio Goncalves. Editing by Andrei Khalip, Mark Potter and Richard Chang

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