TAP Portugal wants to sell its 20% stake in Air Macau to help finance the purchase of a comparable stake in Brazil’s Varig. The Portuguese airline has been at the forefront of rescue efforts for Varig since before the Brazilian carrier entered court-supervised restructuring last June. In October TAP formed a consortium with Macau and Brazilian investors to buy Varig’s cargo and maintenance units, a key part of Varig’s restructuring plan.
In the next phase, TAP hopes to take a 20% stake in Varig, the maximum allowed under Brazil’s foreign cap. To pull this off, however, TAP needs cash. It will not report its 2005 results until March, but chief executive Fernando Pinto concedes the airline could post an annual loss, mainly due to fuel costs.
TAP sees a brighter future for itself in Brazil than in Macau. It was a founding shareholder in Air Macau in 1994, five years before Portugal handed control of Macau over to China. China National Aviation Corporation (CNAC) is Air Macau’s majority owner, and with only a 20% stake, TAP has little say now in the airline.
TAP may try to sell its Air Macau stake to the local Society of Tourism and Diversions (STDM), which runs Macau’s casinos and also holds a 14% stake in Air Macau. This society, in turn, is controlled by Stanley Ho, an entrepreneur with gambling interests in Macau and Hong Kong. Ho’s Macau-based GeoCapital is also a partner with TAP in the consortium that bought Varig’s cargo and maintenance units. No figures have been disclosed on how much TAP might realise by selling its Air Macau stake. ■
Source: Airline Business
