Portugal’s TAP Air Reports Profitability Ahead of Privatization

Skift Take

The first-half-year performance is good news for parties interested in a stake in Portugal’s flag carrier, set for partial privatization.

Portugal’s flag carrier TAP said on Wednesday that it swung to a net profit of $25 million (23 million euros) in the first half of 2023 on strong revenue growth, boosted by booming tourism, and forecast a strong performance for the remainder of the year.

The unlisted state-owned airline, which the government plans to partially privatize, was $219 million (202 million euros in the red in the same period of 2022.

It said its operating revenue jumped 44% to $2.07 billion (1.9 billion euros) from a year earlier, driven by increased fares and higher capacity as demand for travel returned in force after the lifting of COVID restrictions.

TAP’s recurring earnings before interest, taxes, depreciation and amortisation (EBITDA) jumped 57% to 361.7 million euros and its EBITDA margin – a measure of profitability – rose to 19% from 17.4% a year ago.

Chief Executive Officer Luis Rodrigues said the results showed the company’s sustained trend of commercial and financial improvement and that “the operating margins and deleveraging path, above the targets of the restructuring plan, prove the group’s financial sustainability”.

He noted that demand was still strong, with bookings for the coming quarters reaching “considerable levels, which indicates an intense second half of the year, for which TAP will be prepared”.

The airline, which is undergoing a restructuring under a Brussels-approved $3.48 billion (3.2 billion-euro) rescue plan, has previously said it carried 7.58 million passengers between January and June, a 30% increase from a year ago but still slightly below pre-pandemic levels.

The government wants to kick off the sale process for the company by October, but intends to keep a strategic stake. At least three major global carriers – IAG, Lufthansa, and Air France-KLM – have so far shown interest in TAP.

($1 = 0.9204 euros)

(Reporting by Patricia Vicente Rua; Editing by Andrei Khalip and Sharon Singleton)

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