TAP Books Huge Loss On Brazilian Maintenance Closure

TAP announced earlier this year that it would close the TAP Maintenance & Engineering Brazil.
Credit: Horacio Villalobos / Corbis / Getty Images

When in late 2021 the European Union approved €2.55 billion ($2.78 billion) of Portuguese state aid for flag carrier TAP Air Portugal, it did so on the basis of a restructuring plan that stipulated the divestiture of the group’s Brazilian maintenance operations and certain other non-core activities.

However, with little interest from potential buyers, TAP announced earlier this year that it would close TAP Maintenance & Engineering Brazil, a decision that forced it to take a huge impairment charge in its 2021 results.

Within its total net loss of €1.6 billion (approximately $1.7 billion) for the calendar year, TAP recognized more than €1 billion of one-off costs, “most” of which were down to the closure of TAP M&E Brazil, it said.

“At the end of 2021, with the approval of the Restructuring Plan and with the objective of concentrating TAP on the core air transport business, the decision was taken to sell or to shut down some of the subsidiaries, namely TAP ME Brasil, whose historical performance had been reflected in growing accumulated losses,” the airline stated.

TAP acquired the MRO division of bankrupt Brazilian carrier Varig in 2005, and for much of its life was one of the only shop offering third-party maintenance services for widebody aircraft in South America.

It also benefited from work arising from the growth of Brazilian carrier Azul.

“We are getting more overflow from their facilities and that will definitely continue into the future because these companies don’t want to build larger hangars and insource work,” TAP M&E’s VP operations, Valter Fernandes, told Inside MRO in 2016.

However, Azul completed a new 270,000 ft.2 MRO center at Viracopos International Airport in 2020, while the pandemic that began the same year caused demand for widebody operations and maintenance to nosedive.
Little wonder, then, that TAP struggled to find a buyer for its Brazilian maintenance operation.

James Pozzi

As Aviation Week's MRO Editor EMEA, James Pozzi covers the latest industry news from the European region and beyond. He also writes in-depth features on the commercial aftermarket for Inside MRO.