China takes stake in Portuguese airline and prepares flights to Portugal

23 May 2016

A direct air link between Lisbon and Beijing, a long-standing objective of the governments of Portugal and China, is about to become a reality, at a time when a Chinese airline is taking a stake in Portuguese airline TAP.

With restructuring, completed last week, of the capital of TAP Air Portugal, the airline that offers the most flights between the Portuguese-speaking countries, by August of this year China’s Hainan Airlines (HNA) will have a share of 13 percent after converting the TAP bonds it subscribed.

Humberto Pedrosa, representing the Atlantic Gateway consortium, said at a press conference last Friday that HNA, a shareholder of Brazilian airline Azul, which is part of the consortium that won the privatisation of TAP (Atlantic Gateway), “will have an indirect stake in TAP of 13 percent with the conversion of the bonds by Azul that (…) may reach 20 percent.”

Portuguese weekly newspaper Expresso reported HNA taking a stake in the consortium will happen when the transaction is closed, when private shares are transferred to the state.

Getting a link to the Far East “as soon as possible”, including to Beijing, was one of the goals outlined by the Portuguese Minister of Planning and Infrastructure, Pedro Marques, resulting from the Chinese involvement in TAP.

David Neeleman, who in November sold about a quarter of the share capital of Azul to the HNA Group for 1.7 billion reais, has argued that the partnership with the Chinese group could allow the Brazilian carrier enter the Asian market through code share agreements.

HNA’s involvement in TAP was initially limited to financing the Portuguese company, through a bond issue of 90 million euros.

The purchase and sale agreement of TAP shares stipulates that the State keeps 50 percent, and the Gateway consortium, has 45 percent, which may increase to 50 percent with the capital available to TAP employees.

Jorge Costa Oliveira, Portugal’s Secretary of State for Internationalisation, said last week that by the end of this year, a flight is expected to be launched between Hangzhou (capital of Zhejiang province), Beijing and Lisbon.

The connection, for which “they are reviewing the final details,” will be operated by Beijing Capital Airlines, a subsidiary of HNA, the Secretary of State told Portuguese news agency Lusa. (macauhub/CN/ PT)