Portugal’s TAP profit falls on foreign exchange losses

Newswire

Lisbon: Portuguese airline TAP said this week its second-quarter net profit fell 10% to 72.2 million euros ($80.3 million), as foreign exchange losses from the devaluation of the Brazilian real offset an operating income increase.

The state-owned flag carrier’s operating income rose 3.4% to 1.1 billion euros during the period, with passenger revenues up 0.8% to 986.4 million euros.

TAP said net profit was “impacted by foreign exchange losses following the depreciation of the Brazilian real”.

Chief Executive Luis Rodrigues said in a statement that TAP remained on “the necessary path of structural transformation”.

“We continue on the path we set out to follow, with the commitment of our people and the support of our stakeholders, to establish TAP as a sustainably profitable company and one of the most attractive companies in the industry,” he said.

The airline’s operating costs fell 0.8% to 938.6 million euros, despite an 18% jump in wage costs as it reversed pay cuts imposed under a tough restructuring plan. Passenger numbers rose 2.2% to around 4.2 million.

TAP’s recurring earnings before interest, taxes, depreciation and amortisation (EBITDA) rose 19.6% to 289 million euros and its EBITDA margin – a measure of profitability – rose to 26.1% from 22.6% a year ago.

In July, Infrastructure Minister Miguel Pinto Luz said that the centre-right government wanted to privatise TAP sooner rather than later to take advantage of market interest in the airline and was moving forward with preparatory work.

TAP has so far attracted interest from Lufthansa (LHAG.DE), opens new tab, Air France-KLM (AIRF.PA), opens new tab and British Airways owner IAG (ICAG.L), opens new tab.