TAP Air Portugal reports $70m yearly net profit
Currently undergoing a restructuring process, the airline has returned to profit ahead of forecasts.
Portuguese national carrier TAP Air Portugal has posted its latest financial figures, which show the airline turned a profit in 2022. The return to profitability follows a period of restructuring for the airline, which has been going through a turbulent period in its history over recent times.
What do the latest figures tell us?
The national airline of Portugal, TAP Air Portugal, swung to a modest profit in 2022. This return into the black comes earlier than expected for the carrier, which is currently entrenched in a drastic restructuring plan.
Thanks primarily to rising revenue and lower staff costs, the airline was able to offset the soaring fuel costs imposed on the industry over the past year. The company managed to be profitable even though fuel costs more than tripled in 2022 from the previous year to €1 billion (US$1.08 billion).
In its latest financial results, TAP posted a net profit of €65.6 million ($70.4 million) in 2022. This compares favorably with a net loss of €1.6 billion ($1.73 billion) a year earlier. As with all airlines, TAP Air Portugal was hugely affected by the pandemic in 2021, and the improvement figures are, in part, a reflection of the easing of restrictions and the post-pandemic rise in demand for air travel.
TAP’s operating revenue jumped to €3.5 billion ($3.78 billion) in 2022 from €1.39 billion ($1.5 billion) a year earlier. Recurring earnings before interest, taxes, depreciation, and amortization (EBITDA) of €777.7 million ($840 billion) compared with a minus figure of €999 million ($1.07 billion) in 2021.
In 2022, TAP flew 13.8 million passengers, up from 5.8 million a year earlier and about 81% of pre-pandemic levels.
Announcing the airline’s latest figures, outgoing Chief Executive Officer of TAP, Christine Ourmieres-Widener, said.
“During the first full year of the restructuring plan, TAP generated an operating profit that is an all-time record for the company,”
TAP is currently restructuring
The Lisbon-based carrier is currently restructuring under a Brussels-approved €3.2 billion rescue plan. This has seen the airline make drastic cuts to its workforce, downsizing its fleet, and wage reductions for the majority of its workforce.
Under the plan, the airline had been aiming to achieve positive operating results in 2023 and a net annual profit in 2025. With the latest set of results, TAP appears to be forging ahead of the timeline prescribed by the plan.
Back in December 2022, as a result of a two-day cabin crew strike, TAP was forced to cancel 360 flights from its hubs at Lisbon Airport (LIS) and Porto Airport (OPO), impacting around 50,000 passengers and costing the airline over €8 million ($8.45 million).
Additionally, the airline has been phasing out older jets in its fleet over the past 18 months. According to ch-aviation.com, the airline’s streamlined all-Airbus fleet currently consists of –
A year of turmoil
The past twelve months have seen the airline embroiled in a financial scandal resulting in the sacking of its Chief Executive Officer, a crippling cyber attack, being forced to pay a one million dollar fine, industrial action by staff, along with the carrier facing crew shortages this coming summer as a result of struggles to recruit new employees.
In a statement provided to local media earlier this month, trade unionists confirmed that the Portuguese flag carrier was facing challenges recruiting new flight deck, cabin crew, and maintenance employees, potentially putting the airline’s summer operating program at risk.
According to the union’s statement, one of the key drivers of this issue is the low salaries offered by the airline. Following the mandatory redundancy program imposed by the airline that has seen nearly 3,000 employees let go since the pandemic, the remaining staff members’ wages were slashed by up to 25%.
Privatization is on the cards for TAP
As a result of the losses incurred by TAP over recent years, the government of Portugal announced in 2022 that it was considering an outright or partial sale of the airline. So far, Air France-KLM, Lufthansa Group, and the owner of British Airways and Iberia, IAG, have all expressed an interest in taking over the running of the airline.
In early February, Portugal’s finance minister Fernando Medina said the government had started the required preliminary work to start the privatization process of the airline.
