Portuguese Flying Cow and a Tragedy of the Commons

written há 8 meses Artigo de Opinião


Like for many other Portuguese strategic groups, public funds supported TAP for years, despite this company requiring a severe restructuring of its accounts and activity long before March 2020.

 

TAP is one of the largest airlines in Europe and a strategic corporation that feeds dozens of national suppliers. These days the Portuguese flag carrier airline has its fleet grounded and is unable to make payments to creditors of its massive debt, i.e., around 3.300 M€. Portuguese Law is clear if a company is unable to pay its debt, that company is in insolvency. However, this is only for the commons, who need to be drained from the market because of its toxicity.

But, TAP is partly a state-owned company and is a “Holy Cow”, don’t be misled, it’s not a Cash Cow – in the parlance of Boston Consulting Group experts – despite being in a slow-growing category, it consumes more cash than generates. TAP barely has profits in its history, and, it has been loss-making for many of its 75 years. The Great Lockdown was the trigger, and eventually, the perfect excuse, for a situation that was unsustainable for a company with a more extensive and expensive fleet than the Spanish Iberia, now owned by British Airways group.

Like for many other Portuguese strategic groups, public funds supported TAP for years, despite this company requiring – not (only) investors, but – a severe restructuring of its accounts and activity long before March 2020. There was no courage to do it differently.

Soon, the bill will arrive and, adding to the loan(s) that will be secured by public authorities – with the agreement of the European Union – the public will receive the news that parts of the corporation need a payment delay, and, that, again, the public authorities will secure the service. We all hope this is not until employees reject job-cuts, or, planes being at foreign airports without credit or cash to purchase fuel to return Lisbon. The city where much other Holy Cows will be asking for public support, which means more taxes for the commons.

From the bench of taxpayers, those who accept everything and can reject nothing, there are some commonplaces.

What’s the TAP’s loss per day?

I can bet that my bill with today’s lunch is smaller than my today’s bill with TAP.

Sooner than later somebody will also ask which example is more suitable to follow, the Swissair’s insolvency (2001) or Alitalia’s state-owned (in)corporation (2020) that was bankrupt in 2008? Anyhow, I can bet that the pizza in the cheese fondue will be a costly option on this road to enslavement or serfdom where time is of paramount importance.

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