11/04/22
TAP Air Portugal 2021 accumulated results.
Net loss of EUR 1.6 billion in 2021, better than forecasted in the Plan (EUR 1.75 billion), including the recognition of non-recurring costs of EUR 1 billion.
Decision to close TAP ME Brasil at the end of 2021. TAP ME Brasil is accountable for most of the non-recurring costs.
- Significant recovery of recurrent EBITDA in the second half of 2021, offsetting the operating losses recorded during the first half, allowing 2021 to close with a positive recurring EBITDA of EUR 11.7 million.
- In the last quarter, in the context of the Restructuring and reorganization plan of TAP SGPS, TAP SA recorded non-recurring costs of €1,024.9 million with an impact on results.
The first half of 2021 was marked by severe restrictions on domestic and international mobility due to the Covid-19 pandemic, leading to an almost total grounding of the airline's aircraft for several months.
Throughout the second half, borders gradually reopened, although two of TAP's main markets, Brazil and the USA, only resumed international flights with Portugal during the last quarter of the year.
At the end of 2021, with the approval of the Restructuring Plan and with the objective of concentrating TAP on the core air transport business, the decision was taken to sell or to shut down some of the subsidiaries, namely TAP ME Brasil, whose historical performance had been reflected in growing accumulated losses.
Thus, as part of the corporate restructuring of the TAP Group included in the Restructuring Plan, an extraordinary impairment on the account receivable from TAP SGPS was recorded, which represents most of the non-recurring operating costs recorded in Q4 2021.
Despite the slow reopening of borders, particularly outside the Schengen area, and the spread of the Omicron variant, TAP was able to limit the losses resulting from the forced grounding of its fleet through:
- Careful management of the routes available for operation, with the use of the appropriate type of more flexible and efficient aircraft.
- Resizing human resources and personnel costs.
- Large-scale renegotiation of contracts with suppliers.
- Adoption of a new policy of strict control of expenditure and investment by all areas of the Company.
The pursuit of this strategy is reflected in the significant recovery of recurring EBITDA in the second half of 2021, offsetting the operating losses recorded during the first half, allowing 2021 to close with a positive recurring EBITDA of EUR 11.7 million.
In the last quarter of 2021, in the context of the Restructuring and reorganization plan of TAP SGPS, TAP recorded a non-recurring cost item of EUR 1,024.9 million impacting the results.
In operational terms, the number of TAP passengers grew by 25.1% (YoY) in 2021, still around 34.2% of the 2019 level. The demand (measured in RPK) increased by 25.6% (YoY), although still 35.5% of 2019 figures. Passenger revenues increased by 25.8% in 2021, above the overall 20.1% (according to IATA) growth in industry passenger revenues.
Total operating revenues reached €1,388.5 million, an increase of €328.4 million (+31.0%) compared to 2020 operating revenues. Passenger revenues increased by €218.8 million. Cargo and mail revenues were up 88.0% (EUR 110.5 million), fully offsetting the decline in maintenance revenues of EUR 13.7 million YoY (-20.1%).
Recurring operating costs amounted to EUR 1,866.5 million in 2021, a decrease of EUR 52.1 million (-2.7%) when compared to the same period last year, beginning to reflect the restructuring measures undertaken by the Company, namely employee costs (EUR -46.3 million and -11.0% YoY), aircraft maintenance costs (EUR -5.0 million and -20.5% YoY) and cost of materials consumed (EUR -10.1 million and -25.1% YoY).
The decrease in employee costs reflects the gradual departure of 1,480 employees (net) during the year and the salary cuts that started in March 2021.
Recurring EBIT registered a positive evolution of EUR 380.4 million in 2021, to EUR -478.8 million, with a recurring EBITDA of EUR 11.7 million (the 2nd half of 2021 had a positive recurring EBITDA of EUR 176.4 million).
Operating profit (EBIT) after non-recurring items decreased by EUR 523.9 million YoY to EUR -1,488.7 million in 2021.
The net result for the year was negative EUR 1,599.1 million. Of note is the negative net impact of exchange rate differences (EUR 175.5 million) related to the depreciation of the EUR against the USD (with a strong impact on future rentals and therefore non-cash this year), and the depreciation of the BRL against the EUR. On the other hand, the net result of the Jet Fuel hedging had a positive impact of EUR 8.7 million.
Regarding liquidity, 2021 was challenging and TAP remained focused on its liquidity protection measures benefiting from the May and December 2021 capital increases of EUR 462 million and EUR 536 million, respectively (in the context of the COVID Damage Compensation Aid and the Restructuring Aid). TAP ended the year with EUR 812.6 million in cash (+57% than at the beginning of the year).
About routes and fleet, throughout 2021, TAP launched a diversification strategy to drive recovery, which resulted in the opening of new destinations, with various routes both long and short/medium haul, such as: Montreal, Cancun, Punta Cana, Maceió, Zagreb, Ibiza, Fuerteventura, Agadir, Oujda, Monastir and Djerba. In the operational fleet, TAP experienced a net reduction of 2 aircraft to 94, with the phasing out of 2 Airbus A330ceo, 3 Airbus A320ceo and 2 Airbus A319ceo, while 5 new generation aircraft were gradually introduced (2 A321neo LR and 3 A320neo), with TAP successfully securing financing arrangements for these aircraft. At the end of 2021, 66% of the medium and long-haul operational fleet consisted of NEO family aircraft (compared to 57% by 31 December 2020 and 43% by 31 December 2019).
