Earlier this month, TAP Air Portugal completed its first Japanese operating lease with call option (JOLCO) facility in more than 20 years.
The JOLCO transaction, which supports TAP’s ongoing fleet renewal programme, financed one new Airbus A321neo (ACF) via a bespoke cross-currency structure.
MUFG acted as arranger, underwriter and facility agent on the deal, and Norton Rose Fulbright acted as an adviser to TAP.
A source close to the deal told Airline Economics that TAP’s long-awaited return to the JOLCO market is one of the clearest signals of the airline’s overall financial health.
“TAP has always been a very good player, and since they are profitable again coming out of COVID, they have been able to unlock this new source of liquidity at low rates,” the source said.
In 2020, at the height of the COVID-19 pandemic, the Portuguese government extended an initial €1.2bn rescue loan to the carrier, to be converted into equity.
This €1.2bn loan was later combined into a €2.55bn restructuring package that would see the Portuguese government take full control of the airline.
Approved by the European Commission in 2021, the restructuring package proved decisive in pulling TAP through the worst of the downturn.
As the pandemic subsided, TAP’s passenger traffic began to recover, as did its profitability.
In full-year 2022 and 2023, the airline posted back to back record net profits of €65.6 million and €177 million respectively.
Full-year 2024 saw a dramatic decline in net profit (€53.7m), but the airline attributed this to non-recurring items such as “extraordinary” labour claims provisions, FX losses and elevated wage costs.
Total revenue for 2024 remained robust, however, climbing 1% to €4.2bn, as did recurring EBITDA, coming in flat at €875 million.
TAP’s return to profitability has placed it in good stead for re-privatisation or partial resale, a key investor source said – a policy that has been pursued by two successive governments.
In September 2023, the then‑Socialist government of Prime Minister António Costa approved a plan to privatise at least 51% of TAP.
Ultimately this plan was vetoed by Marcelo Rebelo de Sousa, the country’s then-president, who cited concerns over transparency and lack of state oversight of the company.
Following a general election in May 2025, the centre‑right government of Prime Minister Luís Montenegro has relaunched the privatisation process, aiming to sell up to 49.9% of TAP.
Up to 5% of the company is to be reserved for employees, and the partial privatisation is expected to be completed by mid-2026.
Airline Economics understands that TAP’s completion of the JOLCO will act as a significant pull factor as the airline markets itself to private investors.
As one source from a Tier 1 airline recently said: “If you’re good enough for a JOLCO, then you’re good enough for any investor out there.”
The strength of the response to TAP’s JOLCO tender also signals strong interest from a wide range of investors.
In total, TAP received more than 60 responses to its Request for Proposal (RFP), making the JOLCO a “highly competitive” transaction.
As regards potential buyers of the airline itself, major European groups including IAG, Lufthansa and Air France-KLM are reported to be among the competition.
As noted by a source close to the deal, TAP currently has a liquidity buffer of €1.2bn, which significantly reduces short-term refinancing risk.
Airline Economics understands that this solid cash position is one of the reasons that MUFG saw TAP’s JOLCO as a “low-risk” transaction.
Going forward, it is understood that MUFG and TAP plan to be more active in the JOLCO market. MUFG wants to deepen and expand its JOLCO book in key regions, particularly in Europe. The company sees aviation as a pillar of its growth strategy and as a profit driver.