The latest report from S&P forecasts that TAP’s operating profit before interest, taxes, depreciation, and amortization (EBITDA) will decrease to between 680 and 700 million euros this year, down from 852 million recorded in 2024. This decline is attributed to pressures on passenger-paid airfares and the impact of a 20-day strike by pilots of Portugália, the regional subsidiary of the group.
The agency attributes the decline in operating profits mainly to intensifying competition, particularly on transatlantic routes, which has compressed the average ticket price.
S&P projects revenues for 2025 between 4.250 and 4.350 billion euros, with an EBITDA margin of 16% to 17%, below the previous year’s 20%.
Despite the slowdown in operational results, the agency believes TAP should maintain financial ratios “compatible with the current credit level,” with the debt to EBITDA ratio expected to be between 4.0 and 4.5 times.
The same report indicates that TAP should transport up to 17 million passengers in 2025, an increase of 900,000 from the previous year, supported by network expansion and the opening of new routes outside Lisbon. The average load factor rose to 85% in the second quarter, compared to 82.7% in the same period of 2024.
A major point of focus in the report is the privatization process of the company, which, according to S&P, could change the perception of financial support from the Portuguese state—a factor that has been pivotal in assessing the carrier’s credit risk.
The agency emphasizes that maintaining a stable outlook “depends on the assumption that the privatization does not alter the evaluation of the moderate probability of extraordinary financial support from the government.”
Although the sale process does not automatically imply a change in rating, S&P warns that any sign of weakened public support perception, or a possible downgrade of Portugal’s sovereign rating below “BBB-“, could lead to a downward reevaluation of TAP.
Among risk scenarios, S&P acknowledges a potential downgrade if the funds from operations to debt ratio (FFO/debt) falls below 12% and remains at that level for an extended period. Conversely, sustained improvement of results and ratios above 20% could justify an upward revision of the rating.
The agency rates TAP’s liquidity as “adequate,” with funding sources covering needs three times until mid-2026, including 1.167 billion euros in cash.
On the other hand, S&P reiterates that environmental and social factors continue to negatively impact the company’s evaluation due to increasing European requirements for emission reductions and the impact of the gradual end of free carbon allowances under the “Fit for 55” package—the European Union’s measures aiming to reduce net greenhouse gas emissions by at least 55% by 2030.
The terms of TAP’s privatization plan foresee the sale of up to 44.9% of the stake, with 5% of the capital reserved for employees.
According to the timeline, candidates must submit their statement of interest to Parpública, the manager of state holdings, by November 22.
The government expects the process to be completed within a year, subject to Brussels’ authorizations.
So far, Air France-KLM, IAG, and Lufthansa have publicly expressed their interest, but the privatization process is also open to potential investors outside Europe.
