The Government wants to sell TAP? Yes, I always wanted. And there are investors interested? Few, but there are. TAP will then be privatized? Not known. Incidentally, neither the government itself knows. With four expressions of interest on the table, firmer than others, the decision is expected shortly. One thing is certain: to sell, you sell everything. Business deficit of Brazil included. At least, all potential buyers will stay with him. Since before one proceed informally authorized by Brussels financial operation, to balance the accounts of the maintenance company.
Since the privatization of the national aviation company began to take shape, even in early 2012, one of the biggest headaches has always been the M & E Brazil, the unit of aircraft maintenance that TAP bought the bankrupt Varig in 2005 and that, apart from consecutive losses, carries a risk of hundreds of millions of euros in tax proceedings labor. There was, moreover, potential buyers such as British Airways / Iberia, who have turned away business because of this company.
But this dilemma, at least, is outdated. The Government has guaranteed to all investors who have expressed interest in the second round of privatization of TAP, forced the collapse of negotiations with Gérman Efromovich in 2012, staying with the M & E Brazil. The molds they assume enterprise diverge. There is a case, for example, in which the proposal is to use an entity to buy the business aviation (TAP SA) and another to acquire the loss-maintenance unit in Brazil. The only investor in doubt is Air Europa, which is still gathering information on the accounts of the Brazilian company to make decisions.
These warranties give comfort to the executive Passos Coelho because there is something that, even with no a definitive and consensual position on privatization of TAP is already decided: to sell up, sell up everything. The model is not closed, but the perimeter of the business sim. Lose much of the group, aviation, and stay with the bad is not an option.
500 million in Brazil
But the clock is ticking and you need to decide . Because, beyond the time required to launch a privatization, the executive can not get rid of the M & E Brazil before moving forward with a financial transaction proposed earlier this year by the management of the airline. The president, Fernando Pinto, and, Luís Rodrigues, financial manager designed as the PUBLIC reported in February, a solution to clear the balance of the maintenance unit that the Government has decided to take on.
solution, very similar to the one made in 2011 before selling 51% of operator handling TAP, Groundforce, the Urban, goes through turn into capital loans over the years by the group to cover the losses of the M & E Brazil. The PUBLIC, which serve to balance the accounts of the subsidiary, clearing the liabilities are about € 500 million, was found.
The Ministry of Economy has been since the beginning of the year, to review the transaction and has informally signaled the European Commission intends to ensure that this would not put obstacles because of the Community prohibition of state aid in the sector aviation. Side of Brussels, there are indications that there will be doubts raised. And therefore, there is scope to move already. But even if the second round of privatization of TAP does not proceed, the conversion of loans into equity happen anyway, even though no deadlines set.
After a thorough restructuring that cut in half the number of workers, the M & E Brazil has made progress in the last year and a half. In addition to increased revenue, which allowed the company reached in February, and for the first time since it was purchased, a positive operating result, some of the lawsuits facing have had positive outcomes, which has substantially decreased the risk. Still, the deal made in 2006 (which Geocapital partner, the Macanese businessman Stanley Ho, quickly left) continues to be the main responsible for the devaluation of TAP in a potential sale.
Returning to potential stakeholders. The Government received, even in late 2013, a consortium of approaches that joins the Portuguese entrepreneur Miguel Pais do Amaral, the former owner and president of Continental Airlines Frank Lorenzo and the national transport group Barraqueiro. Contacts and information exchange that resulted in the continued presentation of a preliminary proposal to buy 100% of TAP.
On the other hand, began to take shape the interest manifested by David Neeleman, which controls the air carrier Brazilian Blue and in 2012 had been auscultated by the staff of the State to enter the race for the national aviation company, but never advanced. Although Latin America resists the eternal candidate Gérman Efromovich, which continues to have the TAP on the radar. And more recently, the Government joined the batch of potential buyers Air Europa, owned by Spanish group Globalia. Although in this case there is still long way to go until it can ensure that the company will attend the relaunch of the privatization move.
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