Ryanair Unhappy With TAP Air Portugal Bailout

Ryanair’s CEO Eddie Wilson has said the airline would continue to fight state-aid for national carriers to the very ‘last resort’. Following appeals of EU Commission approval for French, German, and Swedish government aid, it has its sights set on the Portuguese bailout of flag-carrier TAP – which could end up reaching over €3 billion before its restructuring process is complete.

Ryanair, Health Passport, Summer 2021
Ryanair says it will fight Portuguese state-aid to the very ‘last resort’. Photo: Tom Boon – Simple Flying

The fact that Ryanair is unhappy with a state-supported bailout of a national airline should come as a surprise to no one. Over the past year, the Irish low-cost carrier has brought court cases against government support to Air France, SAS, Lufthansa, and Finnair. The airline has filed no less than 16 lawsuits against the European Commission related to state-aid since the beginning of the pandemic.

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Anti-European aid

The latest round of discontent is directed towards the government support for Portuguese flag-carrier TAP Air Portugal. The European Commission first approved the €1.2 billion ($1.435 billion) bailout in June last year. Ryanair has now vowed to appeal the decision and fight what it calls ‘illegal state aid’ to the very ‘last resort’.

Speaking to Portuguese newspaper Público, Ryanair’s CEO Eddie Wilson said that,

“We and other airlines transform the Algarve – and if we don’t receive a penny from the Portuguese government, why should another airline be any different? It’s bizarre, anti-European and anti-competition.

“What we are saying is that if there is a pandemic and the whole sector needs to recover, the emphasis should be on recovery. (…) this recovery will be measured in the number of passengers transported, for example, to Portugal benefiting the economy, helping to create employment, assuring connectivity and supporting tourism.”

Under non-pandemic circumstances, Ryanair flies to Lisbon, Porto, and Faro on the Portuguese mainland and to Ponta Delgada and Terceira on the Azores in the Atlantic.

TAP Air Portugal Airbus A330-941 CS-TUQ
The government has already paid €1.2 billion to TAP and expects its airline to require more aid than initially planned to make it through 2021. Photo: Vincenzo Pace | Simple Flying

More funds needed immediately

For 2021, the Portuguese government has budgeted another €500 million ($606 million) to help its struggling airline. It has already sought approval from the Commission for the funds to be granted as ‘interim aid’ while the airline undergoes restructuring. The plan, submitted in December, involves 2,000 job cuts by 2022, 25% pay cuts, and another €2 billion in state-guaranteed funds to cover expenses until 2024.

Eddie Wilson is skeptical about the airline’s potential of ever being able to repay the funds and that keeping TAP alive will end up being all at the expense of the tax-payers.

“It’s bizarre when you receive State aid just because of what is painted on the outside of the plane,” the Ryanair CEO said in the interview.

TAP Air Portugal Airbus A330-941 CS-TUA
Mr Wilson said airlines should not receive aid just because of what color livery they fly. Photo: Vincenzo Pace | Simple Flying

Down 93% in capacity

Meanwhile, Finance Minister Joao Leao has said that exactly how much will be needed this year is still under ongoing analyses. The number will most likely end up being higher as the pandemic has a stronger and more protracted impact than expected, Mr Leao said according to Reuters.

Last month, the airline was operating at only 7% of its originally planned capacity. Due to severe travel restrictions at home and across the globe, TAP has been operating a skeleton schedule, ensuring air connectivity to cities with a significant Portuguese diaspora.

Do you think Ryanair will ever manage with one of its state-aid appeals, or is the airline wasting its energy and resources on a battle it is destined to lose? Leave a comment below and let us know.

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