COMMISSION DECISION (EU) 2022/763
of 21 December 2021
on the State aid SA.60165- 2021/C (ex 2021/N) which Portugal is planning to implement for TAP SGPS
(notified under document C(2021) 9941)
(Only the English text is authentic)
(Text with EEA relevance)
1.
PROCEDURE
2.
DESCRIPTION OF THE AID
2.1.
Beneficiary: ownership structure and operating subsidiaries
2.2.
Beneficiary: main activities in the aviation sector
2.3.
Origin of the difficulties of the beneficiary and financial situation
2.4.
Description of the restructuring plan and restructuring aid
2.4.1.
The restructuring of operations
2.4.1.1.
Focus on core strategy
2.4.1.2.
Adjustment of capacity
2.4.1.3.
Reduction of costs
2.4.1.4.
Enhancement of revenues
2.4.2.
Overview of restructuring costs and sources of financing
2.4.3.
Solvency and liquidity needs: prospective return to viability
|
Restructuring period |
|||||
EUR million |
2020 |
2021 |
2022 |
2023 |
2024 |
2025 |
Revenues |
1 060 |
[…] |
[…] |
[…] |
[…] |
[…] |
EBIT |
(965 ) |
[…] |
[…] |
[…] |
[…] |
[…] |
Net income |
(1 230 ) |
[…] |
[…] |
[…] |
[…] |
[…] |
Net debt |
4 110 |
[…] |
[…] |
[…] |
[…] |
[…] |
Operational cash flow |
(244 ) |
[…] |
[…] |
[…] |
[…] |
[…] |
Equity |
[…] |
[…] |
[…] |
[…] |
[…] |
[…] |
Source: Company information. All data refers to TAP Air Portugal (including Portugalia) |
2.5.
Preliminary findings in the opening decision
3.
OBSERVATIONS OF PORTUGAL
3.1.
Financial projections and return to viability
3.2.
Proportionality and limitation of State aid to minimum
3.2.1.
New sources of own contribution
3.2.2.
Labour cost reductions
3.2.3.
Breakdown and sources of finance of the restructuring costs
Restructuring costs |
Sources of finance |
MEUR |
% |
|
|
|
Own contribution |
|
|
Acquisition new aircraft |
[…] |
Labour indemnities |
[…] |
[…]% |
Debt reimbursement |
[…] |
Renegotiated contracts third parties |
[…] |
[…]% |
[…] |
[…] |
Lease new aircraft |
[…] |
[…]% |
Labour (Indemnities) |
[…] |
Other contributions |
[…] |
[…]% |
Operating losses |
[…] |
Bond and bank debt covenant (market value) |
[…] |
[…]% |
|
|
Temporary liquidity ([…]% non-guaranteed) |
[…] |
[…]% |
|
|
New bank debt |
[…] |
[…]% |
|
|
Contingencies M&E Brazil |
[…] |
[…]% |
|
|
State aid |
|
|
|
|
Equity injection |
[…] |
[…]% |
|
|
Temporary liquidity ([…]% guarantee) |
[…] |
[…]% |
|
|
|
|
|
|
|
Amount own contribution |
[…] |
[…]% |
|
|
Amount restructuring aid |
[…] |
[…]% |
|
|
TOTAL FUNDING |
[…] |
|
3.2.4.
Burden sharing
3.3.
Measures limiting the distortions of competition
3.3.1.
Divestment of holdings in activities vertically integrated with air transport
3.3.2.
Reduction and freeze of aircraft fleet
3.3.3.
Slot release
3.3.4.
Acquisition and advertising ban
4.
COMMENTS FROM THIRD PARTIES
4.1.
Comments from competitors
4.1.1.
Ryanair
4.1.2.
EAA
4.2.
Comments from other third parties
5.
COMMENTS FROM PORTUGAL ON THE OBSERVATIONS OF THE THIRD PARTIES
5.1.
Need to ensure connectivity
5.2.
Appropriateness of aid
5.3.
Return to long-term viability
5.4.
Proportionality
6.
ASSESSMENT OF THE MEASURES
6.1.
Existence of State aid
6.1.1.
State resources and imputability to the State
6.1.2.
Advantage
6.1.3.
Selectivity
6.1.4.
Distortion of competition and effect on trade
6.2.
Conclusion on the existence of aid
6.3.
Lawfulness of the aid
6.4.
Compatibility of the aid with the internal market
6.4.1.
The aid facilitates the development of certain economic activities or certain economic areas
6.4.1.1.
Prevention of social hardship or market failure contributing to the development of economic activity
6.4.1.2.
Restructuring plan and return to long-term viability contributing to the development of the economic activity or area
6.4.2.
Positive effects of the aid for economic areas outweigh the negative effects on trade and competition
6.4.2.1.
Necessity
6.4.2.2.
Appropriateness
6.4.2.3.
Proportionality of the aid: own contribution and burden sharing
6.4.2.4.
Negative effects
6.4.2.5.
‘One time, last time’ principle
6.4.2.6.
Measures limiting distortions of competition
i) Assessment of the divestiture of non-core businesses
ii) Assessment of the aircraft fleet cap
iii) Assessment of the commitment to transfer slots at Lisbon airport
2025 |
Restructuring plan No transfer of slots |
Sensitivity analysis Transfer of 18 slots |
Viability test 1: ROCE > WACC of 7,5 %-8 %; test 2: ROE > cost of equity of 10,5 %-11 % |
||
ROCE (=(1-21 %)*EBIT/CE) |
[…] |
[…] |
ROE (= Net Income/Equity) |
[…] |
[…] |
Indebtedness and creditworthiness: test 3 in difficulty (UiD) if EBITDA/Interest < 1 Debt/Equity> 7,5; test 4: Debt/EBITDA < 3-3,5 |
||
Net Debt/Equity |
[…] |
[…] |
EBITDA/Interest Expense |
[…] |
[…] |
Net Debt/EBITDA |
[…] |
[…] |