The first semester of 2019 was marked by a global negative period for civil aviation in Europe, TAP’s results during this period accompanied the decline tendency verified with overall European flagship airlines2.

In spite of this context, the Company reached a new record in the number of passengers, having transported 7,9 million Clients within the first six months, a growth of 4,8% in comparison to the same period of last year. It should be brought to attention that in the months of July and August of 2019 a growth of 11,5% was verified compared to the homologous period of the previous year, consolidating the initiation of a recuperation trajectory in the second trimester.

The investment in the extension and renovation of the fleet carried on with the entry of 15 of the latest generation aircrafts and the exit of five old aircrafts. Thus, TAP’s fleet was comprised of 106 aircrafts in the last semester. The new aircrafts have allowed TAP to expand to eight new markets during the first semester, in which the start of operations in the Middle East should be highlighted (the route of Telavive) as well as the reinforced investment in the USA, with the contribution of new routes being opened in June (San Francisco, Chicago and Washington).

This investment allowed TAP to obtain important efficiency gains in the semester, being the only comparable European flagship airline2 that reduced it unitary operational costs in 8,8% when comparing with the last year, increasing its cost advantage over these companies. The reduction of operational costs benefitted from a successful protection policy (hedging) of fuel prices.

The mentioned efficiency gains were a positive influence on EBITDAR3 the registered a 19,5% growth in comparison the first semester of the previous year. In the first semester the, successful, turnaround of ME Brazil was concluded, as the subsidiary registered a positive EBITDAR3 of EUR 3 million.

The net income of the TAP Group in the first semester of 2019 was EUR -119,7 million4, mainly impacted the drop in ticket revenue to Brazil in EUR 43,1 million and by the increase in personnel cost of EUR 35,3 million (+10,6% when comparing to the homologous period) due to new hires and negotiated salary reviews in 2018. Note that the net income of the first trimester of 2019 was EUR -110,7 million, having improved to EUR -9 million in the second trimester (which can be compared to EUR -26,4 million of the previous homologous period), leading to a recovery tendency.

The recovery registered in the second trimester, with the behavioral perspectives of TAP’s main markets show that for the second semester, registered reservations within the Company’s system and the increasingly achieved benefits with the renovation of the fleet, leave the expectation that this year will achieve a better operational result than in 2018.

The markets notable response to the bond issuance in June of 2019, significantly impacted the available financial resources, allowing TAP a cash position – a particularly relevant indicator for airlines – more comfortable and unparalleled in recent years. The cash position in the end of the first semester of EUR 393,5 million and the extended maturity average of financial debt consolidate the Company’s capability to proceed with its ongoing transformation plan, that is one of the most important and demanding pillar in the investment in fleet renewal.

(1) TAP adopted on January 1, 2019 IFRS 16 - Leases, having opted for the modified retrospective model at the transition date, which does not provide for the restatement of the financial statements of previous years.
(2) Considering Airlines IAG, Lufthansa and Air France-KLM.    
(3) EBITDAR = EBIT + (Depreciation, amortization and impairment losses + Aircraft income + Restructuring costs and other non-recurring items).
(4) Net Income of the subsidiary Transportes Aéreos Portugueses, S.A. in the first half of 2019 was EUR -112 million.