Eleventh-hour intervention over TAP sale

The long-overdue privatisation of TAP – a condition of Portugal’s 2011 bailout – is due to be signed off today (November 12). On Tuesday, however, Portugal’s minority, centre-right government was toppled by a coalition of the Socialist, Left and Communist parties.

"The Socialist Party does not accept that the state does not maintain a controlling stake, as it should have a direct say and presence in the strategic path of this company," the new government has told TAP’s state holding company, Parpublic.

In fact, the Left and Communist parties favour complete public ownership of TAP, while the Socialists want majority government control.

The deal on the table is for the Gateway consortium, comprised of businessman Humberto Pedrosa and David Neeleman of JetBlue/Azul fame, to buy 61 per cent of TAP.

Private control is a necessity for Gateway, and it’s unclear whether the new government has the power to derail the deal at such a late stage.

Financial paper Economico believes that the contract will be signed later today after securing approval from BCP and New Bank, two of TAP’s biggest creditors.

The airline is exposed to around €650m of short-term debt, renegotiation of which has been crucial to the sale.

With that complete, Gateway and Parpublic should meet later for a private signing not attended by government, some Portuguese media have been reporting this morning.

The final hurdle will be to convince Portugal’s national aviation regulator and the European Commission that Pedrosa – a Portuguese citizen – not Neeleman – a Brazilian-American – holds effective control of Gateway and thus TAP.

On paper, Pedrosa does, but it would be ludicrous if Neeleman, the man behind two highly successful airlines, was not directing strategy.

Expect European authorities to look the other way on that one, though.

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