(Bloomberg) -- The European Commission approved 2.55 billion euros ($2.9 billion) of restructuring aid for TAP SA intended to help the ailing Portuguese airline become viable.
The EU Commission also approved 107.1 million euros to compensate the Lisbon-based carrier for damages suffered as a result of the coronavirus pandemic, it said in a statement on its website Tuesday.
Faced with the prospect of TAP collapsing, Portugal's government began providing aid to TAP last year after the carrier had to halt most of its operations due to the coronavirus outbreak. It also increased its stake in TAP SGPS, the holding company that controls TAP, to 72.5% from 50% after buying airline entrepreneur David Neeleman's stake in the company.
“The approved restructuring plan for TAP will ensure the airline's path towards long-term viability,” European Competition Commissioner Margrethe Vestager said in the statement.
Under the plan, TAP will need to adopt the following actions:
- Split its businesses into separate airlines TAP Air Portugal and Portugalia
- Divest certain non-core assets in the course of the restructuring, including subsidiaries in the maintenance business in Brazil, catering and ground handling
- Implement measures to increase competition at the Lisbon airport, where it has a large presence
- Make available up to 18 slots per day at Lisbon airport to a competing carrier
Additionally, TAP SGPS and TAP Air Portugal won't be allowed to make acquisitions and will reduce its fleet until the end of the restructuring plan, the commission said.
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