TAP, SA recorded a loss of 1,230.3 million euros in 2020, which represents an increase of 1134.6 million euros compared to the negative net result obtained in 2019, which was -95.6 million euros, reveals the consolidated results of the air carrier, sent on Thursday. , April 22, to the Securities Market Commission (CMVM).
In the fourth quarter of 2020 alone, TAP, SA reported a loss of 529.6 million euros, 4.46 times more than the loss recorded in the third quarter of 2020, which was 118.7 million euros, according to company data. Comparing the fourth-quarter 2020 loss to the same period in 2019, the national airline’s quarterly performance deteriorated by 544.8 million euros year-on-year, according to data from TAP, SA sent to CMVM.
With a positive impact on TAP, SA accounts for the year 2020, the company indicates foreign exchange spreads (162.1 million euros) related to the appreciation of the euro against the dollar (with a strong impact on future income and the absence of, for the most part, a monetary impact during the year), which offsets More than the punishment suffered by the devaluation of the Brazilian real against the euro. The negative impact of the increased jet fuel costs, amounting to € 165.3 million, is the result of the reduced activity suffered by the Covid-19 pandemic.
March saw the beginning of autumn
In TAP activity in 2020, March saw the beginning of a sharp decline, because before that, “in the first two months of 2020, the key operating indicators maintained the positive trend observed in the second half of 2019,” the report states. The national level of the airline in the information sent to the CMVM.
In the first two months of 2020, TAP’s key operating indicators maintained the positive trend observed in the second half of 2019, registering a significant improvement in the number of passengers carried (13.4% more than in the same period in 2019), in capacity. (As measured by the number of ASKs – the number of kilometers available) that increased by 15% (year-over-year) and the increase in the load factor (which defines the aircraft’s capacity use in terms of supply and demand) by 1.9 percentage points (year-over-year), “says TAP.
In TAP, as in the entire aviation sector, “the 2020 process and its results have been severely affected by the decrease in activity as a result of the Covid-19 pandemic, despite TAP’s rapid reaction,” the company comments, in the information sent to CMVM.
72.7% decrease in the number of passengers carried
In terms of “passengers carried, there was a drop of 72.7%,” a indicator that maintained four-year streak growth. TAP ticket revenue decreased by 70.9% in 2020, compared to a decline in the sector globally of around 69% (according to IATA data).
The load factor (which takes advantage of the aircraft’s capacity well) was 64.6% in 2020, compared to 80.1% in 2019 (minus 15.4 pp). During 2020, TAP’s total operating income was € 1060.2 million, which translates into a decrease of € 2,238.6 million (67.9% lower) compared to operating income for 2019, “a decrease mainly attributable to a decrease in ticket income of € 2,065 million. (Down by 70.9%) and the maintenance activity of third parties, which recorded a decrease of 143.4 million euros (67.9% less) compared to the same period of the previous year. From the previous year “, explains TAP.
TAP Air Cargo, with a positive value of 125.7 million Euros
As for TAP Air Cargo, it recorded a decrease of 11.7 million euros year on year (minus 8.5%), with total revenues of 125.7 million euros in 2020, compared to 137.4 million euros in 2019. However, there was a growth of 74% in Shipping revenue in Saudi Arabia. Fourth quarter of 2020 compared to the third quarter of 2020 – from 26.4 million euros in the third quarter of 2020 to 46 million euros in the fourth quarter of 2020, according to TAP’s consolidated income statement, sent to CMVM.
TAP’s operating result (EBIT) decreased by 1,011.9 million euros year-on-year, from positive 47.2 million euros in 2019 to -964.8 million euros in 2020. When adjusted for non-recurring items and restructuring costs, recurring EBIT stabilized before interest and tax. At -858.4 million euros in 2020, compared to 52.7 million euros in 2019 (a decrease of 911.1 million euros from 2019 to 2020) and EBITDA increased from a positive 528.4 million euros in 2019 to -273.7 million euros in 2020.
Operating expenses decreased by 1,226.6 million euros
Total operating expenses were € 2,024.9 million in 2020, a decrease of € 1,226.6 million (-37.7%) compared to the previous year, mainly due to the significant reduction in variable costs associated with the operating decline, due to the company’s quick decision. To adjust capacity and negotiations with suppliers and lessors, as well as reduce personnel costs, which decreased by 258.9 million euros from 2019 to 2020, passing respectively from 678.6 million euros to 419.7 million euros.
The reduction in personnel costs (-258.9 million euros on an annual basis) had an impact on operating expenses, as well as as a result of reduced company activity, reduced manpower due to non-renewal of fixed-term contracts, application of simplified layoffs and, more recently, the application of the exceptional support system to the gradual resumption of activity. These measures were applied throughout the company.
Fuel costs decreased by 529.2 million euros
Another important factor to reduce operating expenses in TAP in 2020 was lower aviation fuel costs (-529.2 million euros year-on-year) and lower traffic operating costs (-456.6 million euros year-over-year), as a result of lower activity. As of March 2020. In addition, operating costs have been reduced through non-recurring impairment costs (44.1 million euros) and restructuring costs (96.1 million euros in 2020, when it was 1 million euros in 2019).
The increase in interest and similar expenses is backed by € 60.4 million year on year in the year (+ 32.6%), which was largely due to the increase in the interest component associated with operating leases (liabilities without a purchase option) and financial leases (liabilities with purchase) plus The cost of financing has increased as a result of the strong investment mentioned above in renewing the fleet in recent years and as a result of the sectoral economic context.
In order to better align with the current market moment and the prospects for recovery in the coming years, TAP has already negotiated an agreement with Airbus, which allowed for a reduction in capital expenditures in the years 2020-22 by about $ 1 billion, and which changed the aircraft purchase contracts for the A320neo and A330neo families.