TAP AIR Portugal’s Growth Accelerates With EU Assistance

TAP AIR Experienced Substantial Growth

In 2023, TAP Air Portugal experienced substantial growth, transporting 15.9 million passengers, marking a 15.2% increase (see Diário de Notícias Madeira) from the previous year. Notably, routes in autonomous regions exhibited a slightly lower growth rate of 13.2%. The overall occupancy rate of TAP flights improved to 80.8% and improved slightly by about 1%. It is still lower than the occupancy rate of Ryanair which is ranging consistently above 90% throughout 2023.

Long Distance Routes Make the Difference

Long-distance flights played an important role in TAP's success, with 4.6 million passengers, reflecting a robust 15.1% increase from 2022 and a noteworthy 9.8% rise from 2019. Particularly, routes to the United States, Canada, and Brazil contributed significantly to this growth.

Lower Passenger Numbers but Higher Revenue

The revenue performance of TAP was commendable, with Revenue Passenger Kilometer (RPK) registering a 16% increase compared to 2022 and a 1.4% rise compared to 2019. Despite the positive trajectory, it's crucial to note that the total number of passengers for TAP, while growing across all network segments in comparison to 2022, remains seven percent below the levels observed in 2019.

13% More Passengers in Madeira And The Azores

An interesting aspect to consider is the growth on routes in the autonomous regions of Azores and Madeira, where passenger numbers saw a 13% increase (1.5 million passengers) compared to 2022. However, the airline continues to face operational constraints as it operates with fewer planes and slots at Lisbon Airport. This limitation stems from the Restructuring Plan imposed by the European Commission (PDF), which is set to persist until 2025. This plan has affected TAP's operational capacity and expansion opportunities.

EU’s Restructuring Plan for TAP AIR Portugal

The EU’s Restructuring Plan imposed on TAP Portugal is a significant measure aimed at ensuring the airline’s long-term viability. Here are some key points about the plan:

• The European Commission approved a €2.55 billion restructuring aid to enable TAP SGPS and the airline TAP Air Portugal to return to viability.

• An additional €107.1 million aid was approved to compensate TAP Air Portugal for damages suffered as a result of the coronavirus pandemic between 1 July 2020 and 30 December 2020.

• The restructuring plan was formally notified to the Commission by Portugal on June 10, 2021.

• The support will take the form of equity or quasi-equity measures, including the conversion of the €1.2 billion rescue loan into shares of TAP Portugal. This is a common way to reduce debt and increase investment in a company.

• As part of the plan, TAP has committed to make available slots at the congested Lisbon airport, where TAP holds significant market power. This gives competing carriers the chance to expand their activities at this airport, ensuring fair prices and increased choice for European consumers.

This plan is set to persist until 2025 and is expected to improve operations and reduce costs at TAP Air Portugal.