TAP Portugal widens 1H loss 14.6% on strikes, fuel costs

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Published: August 20, 2012

TAP Portugal A340-300. By Rob Finlayson

TAP Portugal reported a net loss of €112 million ($ 138 million) for the first half, 14.6% worse than the year-ago period.

The airline blamed strikes and soaring fuel prices for the deteriorating financial performance, but stressed that operations “are highly seasonal and a considerable improvement is expected in the second half of the year.”

TAP said that, although revenue for the first half was up 9.3% year-over-year, reaching €1.08 billion and exceeding what TAP described as the “psychological barrier” of €1 billion for the period, industrial action had an estimated direct negative impact of €21.6 million.

The company’s fuel bill rose 20% to €390 million from €325 million in the year-ago period, which “contributed substantially to the general increase in operating costs,” the airline said.

Within the group, TAP’s Brazil maintenance and engineering arm, Manutenção e Engenharia do Brazil, recorded “a significant recovery” of 31.2%, with losses falling from €30.1 million in the 2011 first half to €20.7 million for the period ended June 30 this year.

TAP’s Portugal-based airport ground handling services subsidiary, Groundforce, which was sold at the end of the period, also reported a marked improvement for the first six months. Although it ended the first half with losses of €2.3 million, it was a 68.8% improvement over the €7.3 million loss recorded for the same period in 2011. TAP said the result suggested Groundforce could achieve its first profit before year end.

Operating performance for the first six months was improved, with passenger numbers at 4.7 million, up 4.7% year-over-year, and TAP’s market share at Portuguese airports up to 41.7%.

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