LISBON – Portugal’s government unveiled Friday a 3.4 billion-euro ($4.1 billion) rescue package for national airline TAP Air Portugal that entails more than 3,500 job losses — around one-third of the workforce.
The plan, which requires the blessing of European Union authorities, also foresees a payroll cut of up to 25% by lowering wages.
If approved, 500 pilots, 750 cabin crew and 750 ground crew will be laid off. Another 1,600 short-term contracts aren’t being renewed at the company, which currently has around 10,000 employees. The fleet is to be cut from 108 to 88 aircraft.
The government predicts the flag carrier, in which the Portuguese state has a 72.5% stake, will lose revenue of 6.7 billion euros ($8 billion) through 2025.
TAP lost more than 700 million euros ($849 million) in the first nine months of this year as the COVID-19 pandemic crunched the travel business. It saw a fall in passengers numbers of more than 70% compared with last year.
The airline was already in difficulty before the pandemic and would go bankrupt without help, Infrastructure Minister Pedro Nuno Santos told a news conference.
Other European airlines are taking similar tough steps.
TAP is one of Europe’s smaller airlines, but its fate is a hot-button political issue for the country’s minority Socialist government which is struggling to contain the pandemic and is coming off a bruising battle in parliament to pass its 2021 state budget.
The rescue brings another financial burden on taxpayers and sets up a possible confrontation with trade unions.
TAP is part of the Star Alliance, a global airline partnership. It flies to more than 80 destinations in about 30 countries, focusing mainly on North and South America and Africa.