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TAP Portugal: ownership changes almost complete, while Azul relationship starts to bear fruit

TAP Portugal's new shareholder Atlantic Gateway Consortium, which includes David Neeleman, the Chairman of Brazilian LCC Azul, has prompted a number of changes. Atlantic Gateway's investment in Nov-2015 has led to a commercial relationship with Azul, giving TAP customers access to domestic destinations in Brazil and giving Azul customers access to TAP's Brazil-Portugal network. There are also signs that the two will reshuffle some routes between them as Azul commences European flights. Moreover, TAP will benefit by receiving aircraft previously ordered by Azul.

Although Atlantic Gateway originally took a 61% stake, it was subsequently agreed that this would be scaled back to 45%, with the Portuguese government regaining a 50% holding and 5% available for employees. An intriguing prospect now is that the Azul shareholder HNA Group may also become a TAP shareholder directly.

TAP reported a loss for 2015 but its ownership and long haul development are more assured now than for some time. Nevertheless, the erosion of its market share on European routes is an ongoing threat. The CEO of Ryanair, which is number two to TAP on Portugal-Western Europe, recently claimed that his airline would overtake it in Portugal in the next couple of years. A strategy to counter this threat is vital.

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