TAP defers lease payments and looks to sell up to eight aircraft

TAP Air Portugal has negotiated payment deferrals for some 60% of its leased fleet, and is looking to sell up to eight Airbus narrowbodies as well as returning some aircraft early to lessors.

The Portuguese flag carrier made the disclosures in a first-half financial results document in which it revealed that it incurred a net loss of €582 million (£528 million) in the six-month period to 30 June. This compares with a €112 million net loss in the same period of 2019.

TAP says it has agreed with Airbus to defer deliveries of most of the A320neo-family aircraft it has on order, and to either postpone the arrival of two A330neos or exchange them for “other models, in light of the market rebound and TAP’s needs at such time”.

The airline has postponed some of the A320neo-family aircraft that were scheduled to be delivered this year to 2021, and the majority of deliveries planned for 2021-22 to 2025-27. The two A330neos it had planned to take delivery of in 2022 have been pushed back to 2024, and the airline highlights the possibility of switching to another aircraft type instead.

According to TAP, its agreement with Airbus reduces its 2020-22 capital expenditure by about $1 billion.

Having initiated discussions with lessors when the Covid-19 pandemic grounded much of its fleet, TAP says it has now finalised agreements which span some three-fifths of its leased fleet.

“These negotiations have been focusing mostly on the deferral of rent payments and maintenance reserves that would be due during 2020, as well as on the amount of future rents,” the airline said. 

In the second half of this year, TAP is taking delivery of one A320neo, one A321neo and another A321LR, to add to the A321LR it took in the first half and is in the process of phasing into its operations. The airline is considering “the possible sale” of six to eight aircraft – six A319s and two A320s – and is studying “the early return of aircraft under operating lease and the potential sale of aircraft under financial lease”.

As of 30 June, TAP’s widebody fleet comprised seven A330s and 19 A330neos while its 61-strong Airbus narrowbody fleet included five A321LRs, nine A321neos and seven A320neos. The airline’s regional fleet features 13 Embraer jets and eight ATR 72 turboprops.