TAP Portugal Lost $443 Million In Q1

On Monday, TAP Air Portugal presented its financial results for the first quarter of 2020. As for most airlines, not unexpectedly, the figures were pretty grim. While on a positive trajectory throughout the first two months of the year, come the end of March, the airline’s losses totaled €395 million ($443 million).

TAP Air Portugal planes grounded
TAP Air Portugal planes grounded. Photo: Getty Images

How quickly things can turn

In an announcement to investors on Monday, TAP Air Portugal said that the first two months of 2020 maintained the same positive trend seen throughout the second half of 2019. This included significant improvements in both operational and financial indicators. Then, not surprisingly, things took a swift turn for the worse, resulting in losses of $443 million for the first quarter of the year.

“Activity decrease in March 2020 as a result of the Covid-19 pandemic, negatively impacted the performance in the first quarter, offsetting the good performance observed in the first two months of the year,” TAP said in the statement seen by Simple Flying.

“The month of March was already significantly impacted by the containment measures adopted by domestic and international authorities that resulted in a significant fall in demand and led TAP to decrease its operating capacity, translating in a progressive deterioration of activity throughout the month,” the airline continued.

The carrier also stated that most of the losses stemmed from fuel hedges and negative exchange rates, both, of course, impacted by the pandemic. Passenger numbers in March declined by 54.7% compared to the same month the year before.

. Photo: Getty Images

Fleet reduction to be expected

TAP also discussed its fleet, informing of three new-generation Airbus aircraft entering into service. The airline took delivery of two A330neos and one A321neo. As one A319 aircraft has been phased out, this means the Star Alliance member closed the first quarter with a fleet of 107 aircraft (including those operated by regional subsidiaries Portugália and White).

However, that number has already shifted. Since the end of March, TAP has already confirmed the exit of six aircraft – one A320, one A321, three A319 and one E190, the leases for which were up in 2020. However, the size of the fleet is expected to reduce even further “in order to align with the fleet plan currently under revision.”

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TAP Portugal Lost $443 Million In Q1
TAP is currently revising its fleet plan and has already confirmed the exit of six aircraft. Photo: TAP Air Portugal

Portugal open to tourists

The letter to investors also discussed the financial support offered by the Portuguese Government in great detail. The rescue package, approved by the European Commission on June 10th, grants TAP €1.2 billion ($1.36 billion) via a time-limited state-funded loan. Should the carrier fail to repay the debt, it would be given six months to submit a restructuring plan.

Portugal is one of the few countries in Europe to have opened its borders to all foreign travelers from within the EU. Although, it will only begin allowing direct flights from Italy and Spain in July. There is no quarantine requirement, but passengers arriving at the Azores and Madeira must submit to testing.

Do you think airlines of countries that are opening their borders for tourists will bounce back faster than those who remain closed? Let us know your thoughts in the comments.