Managerial finance for engineers

Joo Bagulho

Akademia Grniczo-Hutnicza im. Stanisawa Staszica w Krakowie

AGH University of Science and Technology
 My name is Joo Bagulho.

Im from Caparica, Portugal.

Im in the fourth year of the course of

electrical engineering in the Faculdade
de Cincias e Tecnologias (Faculty of
Sciences and Technologies) of the
Universidade Nova de Lisboa.
 TAP Portugal is the flag carrier airline of
Portugal.

It was founded in 14 March 1945 by Humberto

Delgado.

It has its headquarters in Lisbon and has its

hub in Humberto Delgado Airport also in
Lisbon.

Is a member of Star Alliance since 2005.

TAP Portugal is rated as three-star by Skytrax.

 Privatization process
1991: It was the first time that the privatization of TAP was discussed, when the
Government led by Cavaco Silva approved the transformation of the group into a
public limited company.

1998: Swissair was chosen to buy TAP and signed an agreement that provided for
the sale of 34% of the capital for 115 million euros.
 2001: The agreement that had been sealed with SwissAir is canceled as a
result of the weak financial situation in which the investor was and that
eventually resulted in his bankruptcy.

2004: In the Government of Santana Lopes the idea of selling the company
together with Portuglia which would eventually be bought by TAP in 2006,
began to gain momentum.
 2008: The executive assumes that the sale will have to be delayed after the group has
presented the worst results in its history: a loss of almost 290 million euros, which are
mainly due to the global financial crisis.

2011: TAP is included in the privatization lot entered in the financial adjustment
program negotiated with the IMF (International Monetary Fund).

2012: The first Government of Passos Coelho accelerates the process of selling the
company, but ends up coming to an end with a single candidate: Grman Efromovich.
The proposal of the Colombian-Brazilian investor ends up being rejected at the end of
the year.
 2014: The hearing of investors interested in TAP is relaunched, but the following months
turn out to be adverse to the realization of the sale. In the summer, the delay in the arrival
of new airplanes and the contestation of the pilots, through successive strikes, seriously
affects the operation of the company. TAP ended the year with a loss of 46 million euros
after five years of profits.

2015: In June 2015, for a value of around 400 million euros, the then Prime Minister
Pedro Passos Coelho proceeded to the semi-privatization of the airline and sold most of
the shares of the Portuguese State that was then majority shareholder of TAP Portugal.
Thus, TAP was controlled by 61% by the private consortium Gateway, formed by the
partnership between David Neeleman and Humberto Pedrosa, 34% by the
Portuguese State and 5% by the employees of TAP Portugal.
After the legislative elections held on 4 October 2015 and with the new government
led by Antnio Costa on 26 November 2015, the new government proceeded
immediately to the process of "bringing back" the majority of the capital of TAP to the
Portuguese State.
 2016: On February 6, 2016, the Government signed the agreement with the private
consortium that held the majority of the shares so that the company was re-controlled by the
State. In order to be able to regain the majority of the share capital of TAP Portugal, the
Portuguese State paid 1.9 million euros to the consortium. Since then, the shareholder
structure of TAP Portugal is controlled as follows: 50% by the Portuguese State, 45% by the
private consortium Gateway and the remaining 5% remain in the possession of TAP Portugal
employees.

2017: In May, the deadline for TAP Portugal workers to buy shares corresponding to 5% of the
airline after the privatization. This offer involves the sale of 75 thousand shares, at the nominal
price of 10,38 euros.
 Conclusion
The privatization of TAP Portugal was mainly a political matter, since each
government had a different opinion on this matter.

It was also a subject widely used to campaign politically, as can be seen in the last
legislative elections in which the current Prime Minister Antonio Costa used the fact
that he wanted TAP Portugal to be controlled by the Portuguese state to win votes of
the population.