Privatisation of TAP-Air Portugal requires sale of Brazilian subsidiary

8 March 2013

The sale of TAP-Air Portugal to a private company can only go ahead after the TAP group sells its Brazilian maintenance and engineering company TAP Manutenção e Engenharia Brasil, according to Thursday’s edition of Portuguese financial daily Diário Económico.

The newspaper added that the Portuguese government had already decided it will not move ahead with TAP’s privatisation process before it solves the problem of TAP Manutenção & Engenharia Brasil, which means that the schedule agreed with the team that is supervising the process of financial aid to Portugal will be shifted again, this time to June 2014.

The privatisation operation for the airline was launched last year but on 20 December the Portuguese government brought it to a halt stating that the only interested party, investor Germán Efromovitch, the owner of airline Avianca-Taca, did not provide the necessary banking guarantees.

TAP Manutenção & Engenharia Brasil, which was previously called Varig Engenharia e Manutenção (VEM), was acquired by the TAP group in 2005, in partnership with Stanley Ho’s investment company Geocapital, following the bankruptcy of Brazilian airline Varig.

This subsidiary of TAP, SGPS has had a significant negative effect on the group’s accounts, and in 2011 posted a loss of 62.7 million euros, which “was 14.3 percent better than the 73.1 million euro loss in 2010.”

When it published TAP, SGPS accounts for 2011, state stake-holding company Parpública said that the business area “with the biggest negative contribution for the TAP Group remains maintenance and engineering in Brazil.” (macauhub)

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