The leading European airline groups Air France-KLM, IAG, and Lufthansa have shown varied financial performances in 2024, affected by several operational and market factors such as strikes and aircraft delivery delays. Among them, only IAG, the owner of Iberia, reported an increase in profits.
While TAP experienced a lesser growth in revenue and a substantial decrease in net results (-70% to 53.7 million euros), primarily due to extraordinary costs from employee legal proceedings requiring provisions of 41 million euros, the airline stood out positively in key operational profitability indicators.
“Total passenger revenue per available seat kilometer (PRASK), a major industry metric, increased by 0.6% year-on-year, similar to that of Air France,” stated Dudley Shanley, an analyst at Goodbody.
SkyExpert consultant Pedro Castro highlighted that “while IAG demonstrated robust financial performance in 2024, TAP’s operating margin [20.6%] is just below IAG’s [21.2%] and well above Lufthansa [10.6%] and Air France-KLM [13.5%].”
However, as ISEC lecturer Rui Quadros points out, “although TAP showed operational resilience and efficiency, it also displayed financial fragility and a lack of buffer to absorb unforeseen events, which is especially concerning during the privatization process and in the context of a global yield downturn [revenue per passenger per kilometer] forecast for 2025 (-3.4%), possibly further degrading the average fare and pressuring results,” he added, himself a former manager of Iberia, PGA, and SATA.
On a positive note for TAP, experts have mentioned the airline’s “record revenues and solid operational performance, with growth on routes to Brazil and North America and a high load factor.”
Nonetheless, in terms of net results, it significantly lagged behind its potential buyers – IAG, Lufthansa, and Air France-KLM, which recorded profits between 1.3 and 4.4 billion euros,” the ISEC lecturer noted.
Pedro Castro also pointed out the assertion of the Maintenance & Engineering division “as the fastest-growing unit, contributing significantly to the company’s revenue growth in 2024,” with a 44.6% revenue increase to 236.8 million euros.
“Facing limitations in the expansion of its airline operations due to agreements with Brussels, TAP has successfully pivoted to other profitable business segments,” he commented.
He further recalled that in 2023, it was only in the final quarter that TAP reinstated pre-pandemic labor conditions by restoring salary cuts, “thus for the majority of 2023, the savings from pandemic-related labor conditions were still in effect, impacting the 2023-2024 comparison.”
On the downside, Pedro Castro noted “a significant and repeated exposure to currency devaluations, particularly related to the decline of the Brazilian real.”
“This exposure intensifies as TAP increases flights to Brazil, especially to southern Brazilian destinations: they are farther away, more costly, and a higher percentage of tickets are sold in Brazil and in reais,” he explained.
Additionally, as highlighted by Rui Castro, personnel costs increased by 13%, “escalating the pressure on profitability.” “This is completely unacceptable for a company with so many years in the market that failed to foresee these situations. Despite the challenges, TAP demonstrated operational resilience in a year marked by internal instability and an undefined privatization context,” he concluded.
