Portugal expects to send TAP restructuring plan to Brussels in November

LISBON, Oct 13 (Reuters) - A restructuring plan for Portugal’s flag carrier TAP will be sent to the European Commission in November, the secretary of state for the treasury said on Tuesday, which if approved will buy the airline time to repay a huge bailout loan.

TAP asked for state aid in April after the outbreak of the coronavirus forced it to suspend almost all of its 2,500 weekly flights.

The European Commission approved a 1.2 billion euro rescue loan in June, contingent on the airline drawing up a restructuring plan within six months, or by the middle of December.

If Brussels accepts the plan, TAP will have several years to repay the debt, otherwise it must be repaid immediately.

In its 2021 draft budget, Portugal included a state guarantee for a new loan of 500 million euros to be granted to the company this year

“The restructuring plan is being drawn up, the expectation is that it...could be presented (to Brussels) during November,” Secretary of State for the Treasury Miguel Cruz said.

“Projections have been revised to significantly lower values, as with all airlines in the world,” Cruz told reporters, blaming the high uncertainty caused by the pandemic with some forecasts not expecting the travel sector to recover until 2024-25.

The Portuguese government signed an agreement at the beginning of July to purchase shares from TAP’s private shareholders, increasing its stake to 72.5% from 50% but avoiding a full nationalisation.

Infrastructure Minister Pedro Nuno Santos said in an interview with Reuters that month that TAP was unlikely to succeed alone in the global aviation market and must be open to consolidation in the medium term.

He also said that before the pandemic TAP had been “coveted by several very important airlines”, naming Lufthansa, but saying it was not the only one.

By Sergio Goncalves; Editing by Victoria Waldersee, Kirsten Donovan