Portugal's new government, private owners engage in tug-of-war over flag carrier

LISBON, Portugal – A battle is brewing between Portugal’s new government and the consortium that won the privatization of the country’s national airline, with the government insisting on bringing the flag carrier back under state control.

Prime Minister Antonio Costa said Friday his Socialist government will retake a majority stake in TAP Air Portugal, even if the Gateway consortium refuses to negotiate a compromise. He didn’t elaborate.

Bringing the airline back into public ownership was a Socialist promise in Portugal’s recent general election, but a large compensation payout for the new owners could be hard for the government to justify.

Gateway last month paid 354 million euros ($384 million) for 61 per cent of the airline in a deal with the previous centre-right government. The consortium has since injected fresh capital into the airline, which has debts of more than 1 billion euros, and ordered new aircraft for its aging fleet.

Gateway’s David Neeleman, founder of the JetBlue airline in the United States and CEO of Brazil’s Azul carrier, said Thursday the consortium intended to honour the contract it signed — indicating it won’t budge from the agreement.

The consortium intends to expand the airline’s operations to 10 more U.S. destinations and eight more in Brazil.