The European Commission (EC) has given the nod to $2.87bn (€2.55bn) of restructuring support for Transportes Aéreos Portugueses (TAP) SGPS and airline TAP Air Portugal to return to viability.
It also granted $120.8m (€107.1m) to compensate the damages suffered by the airline due to Covid-19 pandemic.
Portugal informed the EC regarding the funds for TAP Group’s restructuring plan in June this year.
The regulator opened an in-depth investigation into the proposed restructuring plan and approved it.
Under the plan, TAP SGPS will split its businesses into separate airlines TAP Air Portugal and Portugalia.
It will also divest certain non-core assets to restructure, subsidiaries in the maintenance business in Brazil, ground handling, and catering.
Until the end of the restructuring plan, TAP SGPS and TAP Air Portugal will not be allowed for any acquisitions and will reduce its fleet.
Additionally, TAP Air Portugal will implement additional measures for effective competition at the Lisbon airport, where it has a large presence.
It will also make up to 18 slots per day available at Lisbon airport to a competing carrier.
Executive Vice-President Margrethe Vestager, in charge of competition policy, said: “The measures we approved today will enable Portugal to compensate TAP for damages directly suffered as a result of travel restrictions put in place to limit the spread of the coronavirus.
“At the same time, the approved restructuring plan for TAP will ensure the airline’s path towards long-term viability. The significant public support will come with safeguards to limit distortions of competition.
“In particular, TAP has committed to make available slots at the congested Lisbon airport, where TAP holds significant market power.
“This gives competing carriers the chance to expand their activities at this airport, ensuring fair prices and increased choice for European consumers.”