The ongoing legal issues concerning over 700 cases of reinstatement and indemnity payments to TAP Air Portugal cabin crew, related to incidents between 2005 and 2024, are poised to head to court. This development was confirmed by the president of the National Union of Civil Aviation Flight Personnel (SNPVAC).
Ricardo Penarróias noted that the Supreme Court’s decision might impact roughly 2,000 cabin crew members and could cost the airline between 200 to 300 million euros.
Aviation expert and ISEC lecturer Rui Quadros warned that this situation might influence TAP’s privatization, not by deterring potential buyers like Air France-KLM, IAG, and Lufthansa, but by potentially lowering the sale’s value.
“Recent judicial decisions have already forced the company to set aside millions of euros, directly affecting its financial results. Naturally, interested parties will consider these risks when making offers, possibly demanding guarantees or lowering their offers,” stated Quadros, a former manager at Iberia, PGA, and SATA.
Despite these challenges, Quadros emphasized TAP’s robust operational performance in 2024, marked by record revenues and strong performance in key markets, maintaining international interest.
He cautioned, “TAP must not harm itself. Labor stability and sound internal management are crucial to preserving its value at such a strategic moment.”
Pedro Castro, a consultant at SkyExpert, echoed this sentiment, pointing out that the successful legal cases led the SNPVAC to believe up to 700 dismissals from 2005 to 2024 could follow a similar path. TAP has thus set aside 41 million euros to address these potential liabilities.
The analyst asserted that “if this issue isn’t resolved before the sale, it becomes a burden that will likely lower TAP’s valuation during negotiations.”
When asked about future expectations, Quadros suggested that TAP should focus on labor stability and cost control in 2025 to remain attractive to potential buyers and strengthen financial sustainability.
The forecast for 2025 suggests moderate stability in demand but clear pressure on profitability.
The International Air Transport Association (IATA) predicts a 3.4% global decrease in ‘yield’ [passenger revenue], indicating a decline in the average fare per kilometer traveled.
“For TAP, this scenario is even more challenging: with personnel costs already 13% higher in 2024 and potential new legal liabilities, the risk is that rising operating expenses could completely erode the average fare value, negating efficiency gains or strategic route demand growth,” Quadros commented.
The primary challenge will be maintaining margins in a context where revenue per passenger decreases while spending per flight increases. Managing this equation will be essential to sustain business viability and attractiveness during privatization.”
Additionally, Pedro Castro remarked on the delays in aircraft deliveries impacting several of TAP’s competitors. He noted, “TAP has built a significant tariff stronghold known as Portela. It serves as excellent natural protection for fares amid growing demand, which only airlines already operating at Portela Airport, such as TAP controlling 50% of Lisbon’s movements, can exploit.”
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