TAP Air Portugal reported strong third-quarter earnings yesterday (November 19), with the Lufthansa Group formally expressing an interest the following day to bid in the airline's privatisation process.
“TAP Air Portugal is of great strategic importance to the European aviation industry," said Carsten Spohr, chairman of the executive board and CEO of Deutsche Lufthansa.
“Our goal is to strengthen Portugal's global connectivity, preserve TAP's Portuguese identity and ensure the airline's sustainable growth."
Spohr said that with Lufthansa's “extensive investments” in Portugal, the company believes it to be the “best partner” for TAP.
At the start of the year, Lufthansa had finalised a 41% stake in Italy's ITA Airways, with options to acquire full ownership in the future.
The group said it has long been a “driver of consolidation” in Europe, noting that it offers TAP the “necessary size, experience, and financial stability to create sustainable value”.
During the third quarter, the government-owned TAP relaunched its privatisation with aims to sell a 49.9% stake — a process that has long been delayed, with the Portuguese government initially launching its privatisation process in September 2023.
“During this quarter, our shareholder approved the start of the process for the partial privatisation of TAP's capital,” said TAP Air CEO Luis Rodrigues.
“As this process is expected to extend over several quarters, our strategic focus remains unchanged: to transform TAP into a sustainably profitable and attractive company by consolidating operational efficiency and financial sustainability.”
TAP's third-quarter earnings before tax were up 13.7% to €184.2 million.
The airline's net income was up 14.5% to €127.8 million.
The company's operating result slipped 7.6% to €198.5 million, with its operating margin down 1.7 percentage points to 15%.
TAP's revenue was up 2.7% to €1.3bn, while operating costs were up 4.8% to €1.1bn.
“TAP delivered a solid performance in Q3, with higher revenues, supported by a significant contribution from maintenance, solid operating results, and positive net income that fully offset the first half losses, building on the momentum from the second quarter,” said Rodrigues.
He said the summer was “one of the busiest” in recent years.
Third-quarter passenger numbers were up 4.2% to 4.8 million, with capacity up 4.2%. Revenue passenger kilometres (RPK) were up 6.2% and load factor improved 1.7 percentage points to 87.9%.
As of the end of the quarter, the airline had an operating fleet of 99 aircraft, which comprised 38 Airbus A320neo family aircraft, as well as 20 A320ceo jets. The fleet also has 19 A330neo and three A330ceo jets, and 19 regional jets.
As of the end of the quarter, the company had €1bn in cash and cash equivalents, as well as a net debt to EBITDAR of 2.5x.