Analysis: As TAP sale looms, Portugal hopes new CEO will clear the air

Pharol SGPS SA

01/06/2023 07:00

By Sergio Goncalves
       LISBON, June 1 (Reuters) - Fresh from turning round
Portuguese airline SATA, Luis Rodrigues now has to do it again -
and more - after he was picked by the government to lead
troubled flagship carrier TAP as it readies for privatisation. 
    The process could start as soon as next month, so there's no
time to lose. 
    At least three global majors, Lufthansa  LHAG.DE , Air
France-KLM  AIRF.PA  and British Airways owner IAG  ICAG.L ,
have shown an interest. 
    But Rodrigues will need to reassure investors that TAP has
turned a corner after a series of scandals, and mend fences with
unions, which are demanding a reversal of the 20% pay cuts that
remain after the airline nearly went bust in the pandemic.
    A source close to the 58-year-old said he was "very
confident" about the challenge ahead and had spent his first six
weeks at the helm studying the books, making internal
organisational changes and negotiating with labour leaders.
    Before starting at TAP on April 14, he told reporters he
would address "without taboos" issues with the unions, and he
met them just a week after taking over.
    Tiago Faria Lopes, head of pilots' union SPAC, described the
meeting as "constructive".
    He said Rodrigues took lots of notes, expressed concern
about the current state of TAP, but also said he expected
tensions between the company and unions to ease.
    TAP declined to comment for this story or provide Rodrigues
for interview.
    
    CALM FOCUS
    In a sign of his popularity at SATA, about a hundred
employees in October signed a petition asking the Azores'
regional government to reappoint Rodrigues as CEO when his term
was about to expire. 
    He was reappointed in December, but by March had been lined
up by Lisbon to take over at TAP. 
    People who have worked with him agree he is a good fit given
his knowledge of TAP and the industry, his calm manner in a
crisis and good communication skills.
    "He is the right person to lead TAP as his core leadership
skills are being a good listener and a focussed doer. It is what
TAP needs," said Daniel Traca, professor and ex-dean at Nova
School of Business & Economics, who in 2014 convinced Rodrigues
to lead its Executive Education area.
    He has held executive positions in media, telecoms and
advertising companies and served as a TAP executive director in
2009-2014.
    At SATA, his pandemic-recovery strategy bore fruit:
passenger numbers soared 67% to over 1 million in 2022, revenue
almost doubled and the airline swung to a core profit from a
loss in 2021, while its net loss shrank.
    Ricardo Penarroias, head of cabin crew union SNPVAC, said
workers welcomed his appointment at TAP but he must act quickly
ahead a busy summer.
    "There is a problem, though: dissatisfaction among workers
is so great, after the painful measures taken by the previous
management that we can't give the new CEO as much time (without
strife) as he had at SATA," he said.
    In exchange for approving a 3.2 billion euros ($3.5 billion)
state bailout, Brussels in late 2021 backed a tough
restructuring plan for TAP, including reducing its fleet,
eliminating thousands of jobs and cutting wages.
    Union leader Faria Lopes said that was justified when
COVID-19 restrictions crushed the industry, but with demand now
surging, "TAP is cancelling flights due to a lack of available
pilots and crews".
    TAP more than halved its first-quarter losses as passenger
numbers exceeded pre-pandemic levels.
    Faria Lopes said previous management did not adequately
prepare for the summer, with at least 50 pilots still required
to guarantee normal operations.
    Rodrigues will also need to persuade investors that TAP can
free itself from sometimes ham-fisted government interference.
    His predecessor, Christine Ourmières-Widener, was fired
after an irregular severance payment to a former board member.
    "To achieve results, Rodrigues has to do the same he did at
SATA and put an end to the government's constant meddling in the
management of TAP," union boss Penarroias said.
    ($1 = 0.9084 euros)

 (Reporting by Sergio Goncalves Editing by Andrei Khalip in
Lisbon, and Josephine Mason and Mark Potter in London)
 ((sergio.goncalves@thomsonreuters.com; +351213509204; Reuters
Messaging: sergio.goncalves.reuters.com@reuters.net))