TAP SGPS 2019 consolidated half-year and annual results

posted on 24th February 2020 by Eddie Saunders
TAP SGPS 2019 consolidated half-year and annual results

Profit in second half shows strong improvement in operating margins, benefiting from investments made in recent months.

30 new aircraft, more then 900 employees contracted and 11 new routes mark a year of transformation, unprecedented in the sector worldwide.

A year of the greatest ever investment in the airline´s history, focused on the long-term vision, impacting on the year´s net profit.

Highlights of the results for the second half of 2019:

  • Second half with net profit of EUR 14.1 million, compared with a loss of EUR 28 million in the same period of 2018.
  • Number of passengers carried grew by 11% in the second half of the year, compared with 5% growth in the first half.
  • Passenger revenue grows 9% in the second half, in contrast to zero growth in the first half.
  • Cost per available seat kilometre (CASK) on a stage-length adjusted basis dropped 10% in the second half of the year, largely due to the entry into service of the new state-of-the-art aircraft that already account for 35% of the total hours flown in the half-year period.
  • EBITDAR 2.6x higher in the second half of 2019 versus the same period of 2018, reaching EUR 372.7 million (versus EUR 143.1 million in 2018).
  • EBITDAR margin grows 12 percentage points to 20% in the second half of 2019, a figure never before achieved in the Airline’s history.
  • Operating margin moved from 0% in the second half of 2018 to 7.3% in the same period of 2019, achieving an operating profit of EUR 137.2 million.
  • EUR 42 million improvement in net profit compared with the same period of the previous year.
  • Bonds without a State guarantee issued in November, in a total amount of EUR 375 million, to dozens of international institutional investors. This issue strengthens TAP’s financial sustainability and begins to reduce the debt with guarantees provided by the Portuguese State.Highlights of the 2019 annual results:
  • Profit of EUR 14.1 million in the second half of 2019 mitigates annual loss of EUR 105.6 million.
  • Passengers carried totalled more than 17 million, an 8% year-on-year increase, consolidating the growth trajectory of the last four years.
  • TAP was the European company that most grew on the routes to North America, flying on 9 routes in 2019. In 2015, TAP had only three routes. TAP has more than doubled the weight of this market in its revenue.
  • CASK fell 9% in the year as a whole as a result of investment in fleet renewal with more efficient aircraft, consolidating TAP’s position as the most cost-efficient company among its European counterparts.
  • EBITDAR grew 2.3x compared with 2018, from EUR 211.4 million to EUR 477.3 million euros in 2019. The EBITDAR margin increased to a double digit figure, from 6.5% to 14.3%.
  • Operating profit moved from a loss of EUR 44 million in 2018 to a profit of EUR 58.6 million in 2019, reflecting the consolidation of cost efficiency and revenue recovery in the second half of the year, generating an increase in operating profit of EUR 102.6 million.
  • Consolidation of the turnaround of M&E Brasil implemented in 2018 allows a positive EBIDTAR to be achieved for the first time, of EUR 3.1 million in 2019, and without any transfer of monetary resources from Portugal to Brazil.
  • TAP was Portugal’s largest investor in 2019. Investment of over EUR 1.5 billion, including the purchase of 30 new aircraft which enabled the renewal of 70% of the long-haul fleet.
  • Two unsecured bond issues of EUR 575 million, subscribed by over 6 thousand Portuguese families and dozens of international institutional investors, reflecting the confidence of the investor community in the evident results of the implementation of TAP’s strategic project.
  • Strengthening of the balance sheet with the largest cash position in TAP’s history, EUR 434 million.
  • TAP heavily invests in punctuality, improving by 6 percentage points, and in operations regularity, which stands at 99.2% compared with 98.2% in 2018, representing around 1400 fewer cancelled flights than over the previous year.
  • Customer satisfaction measured by NPS improves by approximately 45% in the year, with improvement in all assessed factors.
  • CO2 emissions reduced by 170 thousand tonnes due to fleet renewal, with a 17% reduction in CO2 consumption (kg) per passenger compared with 2015.
  • Investment in TAP’s growth increases contributions and taxes to the State by 28%, from EUR 257 million per year to EUR 328 million, over the last four years (an increase of EUR 71 million per year).
    2019 was a year of unprecedented investment and transformation

    The total investment of TAP in 2019 was unprecedented way in the Airline’s history, driving a transformation unparalleled in the worldwide air transportation industry last year, focusing on the long-term vision. The Airline received 30 new state-of-the-art aircraft, inaugurated 11 new routes and hired around 900 new workers in 2019. TAP Group is, as a whole, one of the largest employers in Portugal and in the period from 2015 to 2019 it created nearly two thousand new jobs, rising from 8,615 employees in 2015 to 10,617 in 2019, all highly qualified.  

    The Airline’s investment in growth increased the contributions and taxes to the Portuguese State by 28%, rising from EUR 257 million per year to EUR 328 million euros, over the last four years (an increase of EUR 71 million per year). TAP was the company that invested the most in Portugal in 2019, investing over EUR 1.5 billion. This investment included the purchase of 30 new aircraft, which enabled 70% of the long-haul fleet to be renewed in a single year. TAP ended 2019 with one of the youngest long-haul fleets in the world.

The process involving the management of the integration of 30 new aircraft and the exit of 18 old ones had a negative financial impact of EUR 55 million on the year’s profit. However, fleet renewal was instrumental in improving efficiency (lower operating cost) and customer satisfaction in the second half of the year.