Portugal decides it’s not ready to sell national airline TAP after all

Portugal’s government shelved the sale of state-owned airline TAP SGPS SA after rejecting the sole offer from Brazilian investor German Efromovich’s Synergy Group.

Synergy, which controls the Avianca airline brands, made the only binding bid for TAP by a Dec. 7 deadline after Portugal opted for a disposal following the country’s bailout by the International Monetary Fund and European Union last year.

“The council of ministers decided not to accept the proposal that was presented for the privatization of TAP,” the government said in a statement handed to reporters in Lisbon. A sale to Synergy would have been the first instance of a company in an ex-colony buying the flag carrier of its one-time ruler.

Cash-strapped Portugal has already sold stakes in utility company EDP-Energias de Portugal SA and energy-grid operator REN-Redes Energeticas Nacionais, and is auctioning airport operator ANA-Aeroportos de Portugal SA. TAP had been expected to fetch a maximum 500 million euros ($663 million), according to Donal O’Neill, an analyst at Goodbody Stockbrokers in Dublin.

TAP had a loss of 76.8 million euros last year, when it carried 9.75 million people, with debt amounting to 1.23 billion euros. While as many as 13 parties sought information on the airline, only Synergy had pursued its interest.

Brazil links

Founded in 1945 with two 21-seat Douglas DC-3s, Lisbon- based TAP’s initial routes included a 12-stop service to Angola and Mozambique. The carrier went private in 1953, with the state retaining a majority stake, before being renationalized in 1975 following the fall of the authoritarian Estado Novo regime.

Swissair Group agreed to buy a stake in 1999, then backed out in 2001, later declaring bankruptcy.

TAP’s chief attraction is its 74 weekly flights between Lisbon and Brazil, with its fast-growing economy, though the carrier also offers the same number of services to Africa and operates 46 routes within Europe. Barclays Plc, Banco Espirito Santo SA, Citigroup Inc. and Credit Suisse Group AG are advising on the disposal and that of ANA, which may be decided this year.

European Union rules limiting outside ownership of the bloc’s airlines to 49 percent meant Efromovich had sought Polish citizenship based on his parents’ country of origin to qualify for a larger purchase. His status was confirmed on Nov. 30, said Ivetta Bialy, a spokeswoman for Poland’s Mazowsze province.

With assistance from Joao Lima in Lisbon. Editors: Chris Jasper, Chad Thomas.

To contact the reporter on this story: Henrique Almeida in Lisbon at halmeida5@bloomberg.net. To contact the editors responsible for this story: Jerrold Colten at jcolten@bloomberg.net; Chad Thomas at cthomas16@bloomberg.net.