TAP Strike Cost EUR€35 Mln, Sell-Off To Go Ahead

May 11, 2015

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A 10-day pilots' strike cost Portugal's flag carrier TAP EUR€35 million in lost revenue and resulting expenses, but the government expects no further obstacles to the airline's planned sale, the economy minister said.

Antonio Pires de Lima also said the participation rate in the strike, which ended on Sunday, had been low.

"The privatisation process continues. It is necessary to ensure that TAP remains viable and sustainable, to ensure its recapitalisation," Pires de Lima told a briefing.

"In just a few days we will know the proposals by bidders," he said, referring to a May 15 deadline for binding bids to buy a majority stake in what is now a wholly state-owned company saddled with debt worth EUR€1 billion.

The government told TAP to prepare a plan to minimise expenses to compensate for EUR€25 million in lost revenue and a further EUR€10 million in costs to cover stranded passengers - half the EUR€70 million estimated by the airline for all but minimum services cancelled.

Pires de Lima accused the pilots' union of irresponsible actions, but said the strike had "failed" because TAP had carried out 2,017 flights in the 10 days of the stoppage that ended on Sunday, 70 percent of all scheduled flights.

"There has never been a TAP strike with such low participation... I do not believe that another strike is possible," he said.

The union has said the strike halted half of all flights and has not ruled out further forms of action to press its demands.

The pilots say the government reneged on a 1999 deal to give them a stake in TAP in the event of privatisation. They also want higher pay for long-serving pilots.

The government has said TAP would have to reduce routes and cut staff if the privatisation fails. Owing to European Union state-aid rules, the government cannot inject capital into the airline.

The privatisation is part of a programme of state-property sell-offs agreed between Lisbon and its creditors under a 2011 EU/IMF bailout, which Portugal exited last year.