Former administrator says TAP must be privatized and quickly

“What I think, quite frankly, is that [TAP] should be privatized and quickly,” said the lawyer, who was heard today in the parliamentary committee for Economy, Public Works and Housing, at the request of IL, within the scope of the conclusions of the General Inspectorate of Finance (IGF) on the purchase of the maintenance and engineering business in Brazil (VEM/ME Brasil), 20 years ago.

For Diogo Lacerda Machado, who helped the State recover 50% of TAP's capital after the privatization carried out by the PSD/CDS-PP Government led by Pedro Passos Coelho, “TAP's management must be private, market-oriented”.

Speaking to journalists at the end of the hearing, the former airline administrator defended a privatization in which the State would hold 50% of the capital.

When asked about the purchase of ME Brasil, which the deputies from IL, PSD and Chega classified as ruinous, Lacerda Machado argued that it was that investment that made TAP a multinational and which currently has “an absolutely abnormal market share in traffic between Brazil and Europe”, which justifies the interest of the large European aviation groups in purchasing the Portuguese company.

For the lawyer, the “worst deal ever made” was the “privatization of the country’s airport infrastructure monopoly” in a 50-year concession to ANA/VINCI.

Regarding the privatization of the airline carried out by the Passos Coelho Government, Lacerda Machado said that, when he sat down with the Atlantic Gateway consortium, led by David Neeleman and Humberto Pedrosa, to negotiate the reconfiguration of the shareholder structure and explained to them the “enormous weaknesses of that privatization process”, the answer he was given “was that the Government knew everything down to the last detail”.

Regarding the IGF report, which he said he disagreed with, Lacerda Machado highlighted that his involvement in the purchase of VEM was “essentially as a lawyer”, while the “strategic management of everything” was the responsibility of TAP's management, then led by Fernando Pinto, who will be heard in parliament on Wednesday.

In a hearing in May 2023, in parliament, Diogo Lacerda Machado stated that there is an “imbecile perspective” on the maintenance business in Brazil, and stressed that without the investment in that country “probably” the company would not exist today, arguing that that “was by far the best investment that TAP has made in 50 years”.

The audit by the Inspectorate-General of Finance (IGF) of TAP's accounts, released in September, criticizes its participation in the maintenance business in Brazil, stating that economic rationality was not demonstrated and that “very significant losses” are expected.

“The economic rationality of the decision by the management of TAP, SGPS, to participate in the VEM/TAP ME Brasil business and, subsequently, not to accept a proposal from GEOCAPITAL, dated 23/01/2007, to renegotiate the partnership in order, in particular, to share risks and burdens, has not been demonstrated, having, instead, opted to strengthen its position in VEM, without guidance from the supervisory authorities or from the shareholder Parpública in this regard, remaining the sole shareholder of Reaching Force and holder of 90% of the capital of VEM”, reads the document.

“Very significant losses are expected from that business due to the non-recoverability of the amounts involved, which, by 2023, amounted to 906 million euros”, according to the report.

In an interview with Lusa in January 2022, TAP's then CEO, Christine Ourmières-Widener, announced that, after failed sales attempts, the group had decided to gradually close its Maintenance and Engineering Brazil (TAP ME) operations, as part of the restructuring plan approved by the European Commission the previous month, which required the separation of non-core assets, namely the maintenance business in Brazil, and those of 'catering' (Cateringpor) and 'handling' (Groundforce).