Portugal confident it will get EU green light for TAP rescue plan in first quarter

Portugal is confident the EC will approve its plan to rescue ailing flag carrier TAP, Finance Minister Joao Leao said in an interview, adding that he expected that green light by the end of March. The government unveiled its overhaul plan last month, proposing 2,000 job cuts by 2022 and pay cuts of up to 25%, while saying the airline would need around E2b in extra funds with state guarantees to cover financing needs until 2024. The stakes are high: if the EU executive rejects Lisbon’s proposal, TAP would have to immediately repay a E1.2b rescue loan agreed in June, which could lead to its insolvency. Leao said that, as part of the rescue plan, the government envisaged converting that loan to equity, which could raise the government’s stake in the airline to about 90%. The government was not contemplating asking private bond holders to take a haircut on payments to ensure TAP’s financial viability, but had not yet ruled it out either. “The main concern of the plan is that to make the firm sustainable,” Leao said. Formal negotiations with the EC formally started this month, he said, adding: “We expect in the first quarter to have the plan approved.”<br/>