Portugal boosts govt’s TAP airline stake to 50%

Portugal`s new Socialist government said Saturday it had boosted its stake in national airline TAP to 50 percent from 39 percent in line with an election pledge of re-nationalization.

Prime Minister Antonio Costa made the announcement, saying Lisbon will pay 1.9 million Euros ($2.1 million) to take 11 percent from the 61 percent stake sold late last year to a private consortium.

The outgoing conservative administration made the sale to the consortium headed by US-Brazilian businessman David Neeleman, founder of Brazilian carrier Azul, and Portuguese associate Humberto Pedrosa.

Costa`s new anti-austerity government pledged to bring TAP back under state control.

After Saturday`s announcement Costa indicated that "the government will not interfere in the daily management of TAP, which will remain in the hands of private shareholders."

He earlier inked an agreement to that effect with the Gateway consortium headed by Pedrosa, which will retain the other 50 percent stake in the airline.

The 12 seats on the airline`s board will be divided evenly between the government and the consortium, Minister for Infrastructure Pedro Marques said.

"TAP will become a stronger company and be in a better position to defend Portugal`s strategic interests," said Costa, stressing the upping of the government stake was entirely lawful.

On taking office, Costa promised that his government would "not permit the state`s loss of more than half of TAP`s capital."

TAP chairman Fernando Pinto warned, however, that it would be "very difficult" to reverse the privatization, saying "180 million Euros have been injected and I have already spent half".

TAP, which employs 10,000 people, has one billion Euros in debt and cash flow problems.