JetBlue founder wins TAP bid

Portugal has been the poster boy for European austerity, sucking up painful restructuring and enormous public sector wage cuts with barely a whimper; far-left populists may have advanced in Greece, Italy and Spain, but the Portuguese have stuck by their traditional parties despite widespread exasperation with the political class.

Yet one condition of the country’s €70bn ($78.5bn) bailout that has remained unfulfilled since 2011: the privatisation of national carrier TAP and its subsidiary maintenance companies: TAP M&E and TAP M&E Brazil.

Now, after two failed attempts, Portugal’s government reckons it can now sell to JetBlue and Azul founder David Neeleman, whose Gateway consortium is offering €10m ($11.2m) for a 61 per cent stake, plus a capital injection of €338m ($379.1m), which amounts to roughly a third of TAP’s debt.

Neeleman also promised to retain TAP’s hub in Lisbon for 30 years and to supply the airline with 53 aircraft.
A commentator in Portugal’s leading daily, Publico, accused the government of selling for a song what had “cost decades of effort by public policy and thousands of workers to build”.

Responding to similar criticism, Portugal’s head of state, Cavaco Silva, asked journalists how much they would pay for an airline more than a billion euros in debt.

He has a point, especially since TAP’s losses widened dramatically last year to €85m, but a more pertinent problem might be European laws that mandate majority ownership of European airlines by EU citizens.

While Neeleman is Brazilian-American, his Gateway consortium is 51 per cent owned by Portuguese businessman Humberto Pedrosa.

Yet Neeleman’s rival bidder for TAP, Avianca owner German Efromovich, is expected to argue that despite Pedrosa’s name on the documents, effective control of TAP would rest with Neeleman.

Eframovich himself secured a Polish passport in 2012 as part of his efforts to acquire TAP and establish a transatlantic link for Avianca-TACA.

Portugal’s transport minister, Sergio Monteiro, had said there are “practically no risks” that the sale to Neeleman will be challenged by the European Commission.

Given the airline mogul’s blistering track record and Europe’s desire to see its airlines out of state hands, Talking Point would be inclined to agree.

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