a350lover
Topic Author
Posts: 715
Joined: Sun Dec 24, 2017 11:21 am

TAP announces 118 million € losses

Fri Mar 22, 2019 2:13 pm

 
Duartelmatos
Posts: 47
Joined: Sun Dec 16, 2018 11:33 am

Re: TAP announces 118 million € losses

Fri Mar 22, 2019 2:22 pm

it’s all about delays and cancellations... Last year was appalling for TAP.
 
LHUSA
Posts: 777
Joined: Wed Aug 24, 2005 10:15 am

Re: TAP announces 118 million € losses

Fri Mar 22, 2019 2:29 pm

Perfect time for unprecedented expansion to unproven, thin, long-haul markets!

(Sorry, I had to)
 
Galwayman
Posts: 727
Joined: Fri Mar 10, 2017 10:20 am

Re: TAP announces 118 million € losses

Fri Mar 22, 2019 2:42 pm

Well obviously what they were doing previously wasn't working , now they have a strategy, the right aircraft and a superb geographical location . Its time to either go big or go home .....
 
Duartelmatos
Posts: 47
Joined: Sun Dec 16, 2018 11:33 am

Re: TAP announces 118 million € losses

Fri Mar 22, 2019 2:47 pm

LHUSA wrote:
Perfect time for unprecedented expansion to unproven, thin, long-haul markets!

(Sorry, I had to)



I would firstly read, before writing...
 
migair54
Posts: 2399
Joined: Thu Jun 14, 2007 4:24 am

Re: TAP announces 118 million € losses

Fri Mar 22, 2019 2:54 pm

Interesting that last year they had profit and this they are having losses. Brazil is the biggest market for TAP and the economy is not doing very well there. What's the reason behind??

This year 2019 TP has a few new destinations schedule to start, but I am not sure if this will help for 2019 result or it will make it much worse, they are going to start some very busy markets with lot of competition, maybe not for the Lisbon pax but for the Europe pax, ORD, EWR, SFO, IAD and some more new european destination, however I think the expansion is too big for a year, we will see what happen in 2019.
 
GalebG4
Posts: 192
Joined: Fri Oct 19, 2012 11:49 pm

Re: TAP announces 118 million € losses

Fri Mar 22, 2019 2:57 pm

I honestly believe that TAP as airline is in perfect position to be financially positive. Feeding from Azul and LIS as European gateway to South America is just perfect business plan for success as Neelman has shown us many times. Yes it is not positive financialy in 2018, but you need to take in fleet transition and expansion from CEO to NEO. TAP is going to be financialy positive and extremely successful and i am 100% sure because they are making perfect business decisions.
 
LHUSA
Posts: 777
Joined: Wed Aug 24, 2005 10:15 am

Re: TAP announces 118 million € losses

Fri Mar 22, 2019 3:01 pm

Duartelmatos wrote:
LHUSA wrote:
Perfect time for unprecedented expansion to unproven, thin, long-haul markets!

(Sorry, I had to)



I would firstly read, before writing...


It's called sarcasm - thought that was painfully obvious
 
a350lover
Topic Author
Posts: 715
Joined: Sun Dec 24, 2017 11:21 am

Re: TAP announces 118 million € losses

Fri Mar 22, 2019 3:02 pm

What's the amount of fleet TAP plans to receive between now and 2020?

As much as they need slots at LIS, they must have secured the fleet to be able to expand as planned.
 
SCQ83
Posts: 5335
Joined: Wed Oct 03, 2012 8:32 pm

Re: TAP announces 118 million € losses

Fri Mar 22, 2019 3:09 pm

GalebG4 wrote:
I honestly believe that TAP as airline is in perfect position to be financially positive. Feeding from Azul and LIS as European gateway to South America is just perfect business plan for success as Neelman has shown us many times. Yes it is not positive financialy in 2018, but you need to take in fleet transition and expansion from CEO to NEO. TAP is going to be financialy positive and extremely successful and i am 100% sure because they are making perfect business decisions.


Sorry, but you meant to Brazil. Lisbon to Spanish-speaking America is marginal (e.g. TAP cancelled Bogotá) and has the largest hub by far in Europe to LATAM 1 hour East by plane (MAD).

In any case reality is stubborn. LIS is a secondary market at best and they are just throwing darts at any airport in Europe and North America. The only way that big network works is by offering low fares to connecting passengers via LIS.
 
Galwayman
Posts: 727
Joined: Fri Mar 10, 2017 10:20 am

Re: TAP announces 118 million € losses

Fri Mar 22, 2019 3:11 pm

The easiest way to reduce marginal costs is through expansion and economies of scale ... TAP need to hold their nerve now more then ever ...
 
Galwayman
Posts: 727
Joined: Fri Mar 10, 2017 10:20 am

Re: TAP announces 118 million € losses

Fri Mar 22, 2019 3:16 pm

There’s a fairly common accounting trick airlines use .... shove as much loss into one year as possible ... write it all off tax wise .., ( in the US declare bankruptcy ), drive down union pay demands ... just before the strategy pays off ... Qantas did this really well , spectacular losses just before they sorted themselves out and now have gobsmacking global profit levels

Strategy isn’t a game for snowflakes clearly
 
CRJ900
Posts: 2350
Joined: Wed Jun 02, 2004 2:48 am

Re: TAP announces 118 million € losses

Fri Mar 22, 2019 3:31 pm

Wonder how much the A339 will improve things... they are flying the A339 on twice-daily LIS-GRU - I'm assuming that is a high-yield route and with 15-20% less fuel used it will add positively to the balance sheet?
Come, fly the prevailing winds with me
 
klm617
Posts: 4378
Joined: Sat Jul 04, 2015 8:57 pm

Re: TAP announces 118 million € losses

Fri Mar 22, 2019 3:35 pm

LHUSA wrote:
Perfect time for unprecedented expansion to unproven, thin, long-haul markets!

(Sorry, I had to)


It's the truth.
the truth does matter, guys. too bad it's often quite subjective. the truth is beyond the mere facts and figures. it's beyond good and bad, right and wrong...
 
luckyone
Posts: 2791
Joined: Thu Aug 21, 2008 1:50 pm

Re: TAP announces 118 million € losses

Fri Mar 22, 2019 3:47 pm

LHUSA wrote:
Perfect time for unprecedented expansion to unproven, thin, long-haul markets!

(Sorry, I had to)

Yeah this will be a great year for backpackers...
 
chonetsao
Posts: 293
Joined: Sun Nov 06, 2005 3:55 pm

Re: TAP announces 118 million € losses

Fri Mar 22, 2019 3:51 pm

As a passenger I refuse to fly TAP due to its revenue ticket sales code underline mapping practise. Their online sales has a problems to sell you a S class ticket, but you never which fare code it really mapped to. So you could end up with T class which does not give any miles or B class which might or might not give you miles. The result is TAP kept it's attractive fares but I am not going to risk flying with them.
 
airbazar
Posts: 9621
Joined: Wed Sep 10, 2003 11:12 pm

Re: TAP announces 118 million € losses

Fri Mar 22, 2019 5:10 pm

Yes 118 million is ugly but the devil is in the details. They claim that 95 million were "one time charges" due to "restructuring". Anyone know the details of those one time charges are? My guess is that it includes the costs associated with shutting down M&E in Brazil, refurbishing aircraft, and adding sharklets. Refurbishing all aircraft and adding sharklets to the entire A320 family couldn't have been cheap.
 
Duartelmatos
Posts: 47
Joined: Sun Dec 16, 2018 11:33 am

Re: TAP announces 118 million € losses

Fri Mar 22, 2019 5:55 pm

40 million due to cancellation and delay refunds + 25 million on earlier retiring programmes
 
a350lover
Topic Author
Posts: 715
Joined: Sun Dec 24, 2017 11:21 am

Re: TAP announces 118 million € losses

Fri Mar 22, 2019 6:42 pm

Duartelmatos wrote:
40 million due to cancellation and delay refunds + 25 million on earlier retiring programmes


Taking into account the situation with the air traffic controllers in France threatens with a bit of chaos for this summer coming again, how busy Portela is, and the expansion which TAP is handling, have they taken any actions so that those cancellations and delays get some better?
 
skipness1E
Posts: 4494
Joined: Sun Aug 19, 2007 9:18 am

Re: TAP announces 118 million € losses

Fri Mar 22, 2019 6:52 pm

airbazar wrote:
Yes 118 million is ugly but the devil is in the details. They claim that 95 million were "one time charges" due to "restructuring". Anyone know the details of those one time charges are? My guess is that it includes the costs associated with shutting down M&E in Brazil, refurbishing aircraft, and adding sharklets. Refurbishing all aircraft and adding sharklets to the entire A320 family couldn't have been cheap.

They did a handful of sharklet retrofits only
 
SCQ83
Posts: 5335
Joined: Wed Oct 03, 2012 8:32 pm

Re: TAP announces 118 million € losses

Fri Mar 22, 2019 6:58 pm

luckyone wrote:
Yeah this will be a great year for backpackers...


For customers it is certainly good as long as it continues. MAD-LIS-XXX is very often the cheapest option by a wide margin (often cheaper than flying non-stop with Norwegian to the US or with Ryanair to Europe). With so many flights on MAD-LIS you can get really quick connections and TAP service is not bad; still one of the few Euro carriers that offers a free drink / sandwich in Economy.
 
a350lover
Topic Author
Posts: 715
Joined: Sun Dec 24, 2017 11:21 am

Re: TAP announces 118 million € losses

Fri Mar 22, 2019 7:44 pm

Is TAP maybe the legacy European carrier with the largest stake of its finances owned by a State (50% of it owned by the Portuguese Government)?
 
OB1504
Posts: 3652
Joined: Tue Jul 27, 2004 5:10 am

Re: TAP announces 118 million € losses

Fri Mar 22, 2019 8:05 pm

chonetsao wrote:
As a passenger I refuse to fly TAP due to its revenue ticket sales code underline mapping practise. Their online sales has a problems to sell you a S class ticket, but you never which fare code it really mapped to. So you could end up with T class which does not give any miles or B class which might or might not give you miles. The result is TAP kept it's attractive fares but I am not going to risk flying with them.


This seems like an issue that only a small minority of travelers would be concerned with.
 
MIflyer12
Posts: 5630
Joined: Mon Feb 18, 2013 11:58 pm

Re: TAP announces 118 million € losses

Fri Mar 22, 2019 8:29 pm

Galwayman wrote:
The easiest way to reduce marginal costs is through expansion and economies of scale ... TAP need to hold their nerve now more then ever ...


The easiest way into bankruptcy for an airline is marginal-cost pricing. Airline economists had that figured out 40 years ago, after all sorts of carriers bought 747-100s because of low CASM and then couldn't begin to fill the seats.

Being a connecting carrier xxx-LIS-xxx isn't a winning strategy unless they are the low cost provider. Do you think their cost structure compares with the best TATL ULCCs?
 
tomcat
Posts: 418
Joined: Thu Sep 28, 2000 4:14 am

Re: TAP announces 118 million € losses

Fri Mar 22, 2019 9:04 pm

MIflyer12 wrote:
Being a connecting carrier xxx-LIS-xxx isn't a winning strategy unless they are the low cost provider. Do you think their cost structure compares with the best TATL ULCCs?


Labor cost are generally low in Portugal compared to the rest of western Europe but I don't know if TAP itself benefits from this. It's a legacy airline after all. This being said, are they really competing with the TATL ULCCs? As far as TATL is concerned, TAP is on the following markets: Brazil-LIS-Europe; USA-LIS-Africa; USA-LIS-Europe. So far, the ULCCs competition is only on the USA-Europe market. Overall, TAP is not so exposed yet to the ULCCs on their TATL markets.
 
Duartelmatos
Posts: 47
Joined: Sun Dec 16, 2018 11:33 am

Re: TAP announces 118 million € losses

Fri Mar 22, 2019 9:16 pm

a350lover wrote:
Duartelmatos wrote:
40 million due to cancellation and delay refunds + 25 million on earlier retiring programmes


Taking into account the situation with the air traffic controllers in France threatens with a bit of chaos for this summer coming again, how busy Portela is, and the expansion which TAP is handling, have they taken any actions so that those cancellations and delays get some better?



Believe me, they have been investing in improving it. They also hired a lot of pilots and canin crew.
 
chonetsao
Posts: 293
Joined: Sun Nov 06, 2005 3:55 pm

Re: TAP announces 118 million € losses

Fri Mar 22, 2019 10:07 pm

OB1504 wrote:
chonetsao wrote:
As a passenger I refuse to fly TAP due to its revenue ticket sales code underline mapping practise. Their online sales has a problems to sell you a S class ticket, but you never which fare code it really mapped to. So you could end up with T class which does not give any miles or B class which might or might not give you miles. The result is TAP kept it's attractive fares but I am not going to risk flying with them.


This seems like an issue that only a small minority of travelers would be concerned with.


Maybe that is what TAP believes too. And that is no wonder why they are loosing money. No business should just laid back and think it is OK to loose some passengers.
 
incitatus
Posts: 3299
Joined: Wed Feb 09, 2005 1:49 am

Re: TAP announces 118 million € losses

Fri Mar 22, 2019 10:22 pm

TAP is a survivor. Look at their peer group from the past: Sabena, Swissair, British Caledonian, Malev, Austrian, JAT, Finnair, Czech. Very few still around.
I do not consume Murdoch products including the Wall Street Journal
 
Noshow
Posts: 968
Joined: Wed Jun 15, 2016 3:20 pm

Re: TAP announces 118 million € losses

Fri Mar 22, 2019 10:30 pm

TAP even had 747s in their old days. Their Lisbon HQ-hangar is still sized for them.
They had a smart boss, Mr. Pinto, who kept them alive through tricky years. Now he is retired for some time.
I hope they recover financially again.
Last edited by Noshow on Fri Mar 22, 2019 10:44 pm, edited 1 time in total.
 
Delta777Jet
Posts: 1401
Joined: Tue Jun 13, 2000 6:19 am

Re: TAP announces 118 million € losses

Fri Mar 22, 2019 10:58 pm

Staff cost may be slightly lower, but they need to operate with more staff than any other airline in Europe. For example an A320 they shall dispatch with five flight attendants instead of the required four. They got an new absurd boarding procedure with 5 queues which doesn't make any sense and they have so many passengers miss connecting at Lisbon , because they are unable to manage the traffic flows. For example arranging a gate to gate transfer in case of a late inbound etc. Many times I see people running for their connection just to find out the gate closed just in front of them , without waiting just a few minutes longer. This must cost them lots and lots of money for compensation payments and customer confidence. The on board product improved and is quite good with seating upgrades etc but still lacking a proper business class seat on longer A320 series flights. However you can still see that they care more about their own colleagues sitting in business class than their revenue paying passengers attitude.
B-717/722/737-200/300/400/500/600/700/800/900/B-747-100/200/400/SP/8i/B-752/3/B-762/3/4/B-772/LR/300ER/B-787-8/-9/DC-10-10/30/L1011-1/500/MD81/82/83/90/A-319/320/321/AB6/312/313/332/333/342/343/346/359/388/TU154/IL18/ATR42/72/DH4/DH3/E145/E170/190/CR2/7/9
 
MalevTU134
Posts: 2114
Joined: Tue Oct 11, 2016 8:04 pm

Re: TAP announces 118 million € losses

Fri Mar 22, 2019 11:03 pm

a350lover wrote:
Is TAP maybe the legacy European carrier with the largest stake of its finances owned by a State (50% of it owned by the Portuguese Government)?

LOT - Polish Airlines is 100% government owned, unless I am mistaken.

https://corporate.lot.com/pl/en/ownership-structure
 
Duartelmatos
Posts: 47
Joined: Sun Dec 16, 2018 11:33 am

Re: TAP announces 118 million € losses

Fri Mar 22, 2019 11:16 pm

Delta777Jet wrote:
Staff cost may be slightly lower, but they need to operate with more staff than any other airline in Europe. For example an A320 they shall dispatch with five flight attendants instead of the required four. They got an new absurd boarding procedure with 5 queues which doesn't make any sense and they have so many passengers miss connecting at Lisbon , because they are unable to manage the traffic flows. For example arranging a gate to gate transfer in case of a late inbound etc. Many times I see people running for their connection just to find out the gate closed just in front of them , without waiting just a few minutes longer. This must cost them lots and lots of money for compensation payments and customer confidence. The on board product improved and is quite good with seating upgrades etc but still lacking a proper business class seat on longer A320 series flights. However you can still see that they care more about their own colleagues sitting in business class than their revenue paying passengers attitude.


I’m reall sorry to inform that you must be mistaken...
I can make a list with the number of cabin crew for each aircraft type:

ATR-72 2
Embraer 3
A319/20 4
A321 5
A330-200/900 9
A340 9
Last edited by Duartelmatos on Fri Mar 22, 2019 11:17 pm, edited 1 time in total.
 
airbazar
Posts: 9621
Joined: Wed Sep 10, 2003 11:12 pm

Re: TAP announces 118 million € losses

Fri Mar 22, 2019 11:31 pm

SCQ83 wrote:
luckyone wrote:
Yeah this will be a great year for backpackers...


For customers it is certainly good as long as it continues. MAD-LIS-XXX is very often the cheapest option by a wide margin (often cheaper than flying non-stop with Norwegian to the US or with Ryanair to Europe). With so many flights on MAD-LIS you can get really quick connections and TAP service is not bad; still one of the few Euro carriers that offers a free drink / sandwich in Economy.


A connecting route will always be cheaper than a non-stop. I don't understand why this is surprising especially when TAP's target market is the same as Norwegian and Ryanair.

MIflyer12 wrote:
Being a connecting carrier xxx-LIS-xxx isn't a winning strategy unless they are the low cost provider. Do you think their cost structure compares with the best TATL ULCCs?

It does. TP and TK have comparable costs to the LCC's. I'm not familiar with any ULCC's flying TATL though.

Duartelmatos wrote:
Delta777Jet wrote:
Staff cost may be slightly lower, but they need to operate with more staff than any other airline in Europe. For example an A320 they shall dispatch with five flight attendants instead of the required four.


I’m reall sorry to inform that you must be mistaken...
I can make a list with the number of cabin crew for each aircraft type:

A319/20 4

Does that include the purser (chefe de cabine)? When did TP eliminate the purser?
 
Duartelmatos
Posts: 47
Joined: Sun Dec 16, 2018 11:33 am

Re: TAP announces 118 million € losses

Fri Mar 22, 2019 11:46 pm

airbazar wrote:
SCQ83 wrote:
luckyone wrote:
Yeah this will be a great year for backpackers...


For customers it is certainly good as long as it continues. MAD-LIS-XXX is very often the cheapest option by a wide margin (often cheaper than flying non-stop with Norwegian to the US or with Ryanair to Europe). With so many flights on MAD-LIS you can get really quick connections and TAP service is not bad; still one of the few Euro carriers that offers a free drink / sandwich in Economy.


A connecting route will always be cheaper than a non-stop. I don't understand why this is surprising especially when TAP's target market is the same as Norwegian and Ryanair.

MIflyer12 wrote:
Being a connecting carrier xxx-LIS-xxx isn't a winning strategy unless they are the low cost provider. Do you think their cost structure compares with the best TATL ULCCs?

It does. TP and TK have comparable costs to the LCC's. I'm not familiar with any ULCC's flying TATL though.

Duartelmatos wrote:
Delta777Jet wrote:
Staff cost may be slightly lower, but they need to operate with more staff than any other airline in Europe. For example an A320 they shall dispatch with five flight attendants instead of the required four.


I’m reall sorry to inform that you must be mistaken...
I can make a list with the number of cabin crew for each aircraft type:

A319/20 4

Does that include the purser (chefe de cabine)? When did TP eliminate the purser?


Those numbers already include the purser.
 
Blerg
Posts: 2195
Joined: Tue Jan 09, 2018 11:42 am

Re: TAP announces 118 million € losses

Sat Mar 23, 2019 6:45 am

tomcat wrote:
MIflyer12 wrote:
Being a connecting carrier xxx-LIS-xxx isn't a winning strategy unless they are the low cost provider. Do you think their cost structure compares with the best TATL ULCCs?


Labor cost are generally low in Portugal compared to the rest of western Europe but I don't know if TAP itself benefits from this. It's a legacy airline after all. This being said, are they really competing with the TATL ULCCs? As far as TATL is concerned, TAP is on the following markets: Brazil-LIS-Europe; USA-LIS-Africa; USA-LIS-Europe. So far, the ULCCs competition is only on the USA-Europe market. Overall, TAP is not so exposed yet to the ULCCs on their TATL markets.


Yes but at the same time LCCs on transatlantic flights have not been very successful. Norwegian is losing money hand over fist, WOW is about to go bankrupt... the jury is still out on whether LCCs can make it over the Atlantic.
 
SCQ83
Posts: 5335
Joined: Wed Oct 03, 2012 8:32 pm

Re: TAP announces 118 million € losses

Sat Mar 23, 2019 6:50 am

tomcat wrote:
Labor cost are generally low in Portugal compared to the rest of western Europe but I don't know if TAP itself benefits from this. It's a legacy airline after all. This being said, are they really competing with the TATL ULCCs? As far as TATL is concerned, TAP is on the following markets: Brazil-LIS-Europe; USA-LIS-Africa; USA-LIS-Europe. So far, the ULCCs competition is only on the USA-Europe market. Overall, TAP is not so exposed yet to the ULCCs on their TATL markets.


Brazil-Europe is substantially cheaper than before the Brazilian crisis. But like way cheaper. Today 500 EUR return fares in economy to Europe are not uncommon. Before the Brazilian crisis those could be easily twice that fare.

I think it helps LATAM becoming more "professional" and hub-focused. Today LATAM is also trying to steal TAP and other European carriers' traffic to Brazil and via their hub in GRU. So there is more competition.

As for low-cost, there is Azul and Aigle Azur (although they have common shareholders with TAP).

In any case, Brazil-Europe is a niche market when compared to US-Europe.
 
SCQ83
Posts: 5335
Joined: Wed Oct 03, 2012 8:32 pm

Re: TAP announces 118 million € losses

Sat Mar 23, 2019 7:03 am

airbazar wrote:
A connecting route will always be cheaper than a non-stop. I don't understand why this is surprising especially when TAP's target market is the same as Norwegian and Ryanair.


For instance a couple of years ago I flew RAK-LIS-MAD with a quick stop-over in LIS for like 70 EUR (of which pretty much everything will be taxes) in low-season. Nothing shockingly surprising except that I purchased the ticket like 4 or 5 days in advance and even Ryanair wanted to charge me way more for a non-stop fare. It seemed like TAP was "begging" to fill the seats like "please fly with me; I am way cheaper than Ryanair".

That has happened to me some other times. Looking for a flight in Kiwi.com often TAP shows as the cheapest connection... by a wide margin.

But I think this is due to TAP's massive expansion. Another example. They are the only European legacy carrier that flies to FEZ in Morocco (not even Iberia or Air France will touch that tiny airport). And year-round. How do they fill a LIS-FEZ daily when local traffic is likely close to zero? The only way is discounting connections and getting passengers from France, Belgium, Spain, etc. that otherwise would fly directly on Ryanair or Air Arabia.
 
C010T3
Posts: 1956
Joined: Wed Jul 19, 2006 5:48 am

Re: TAP announces 118 million € losses

Sat Mar 23, 2019 8:06 am

I don‘t think the discussion is matching the reality of 2018. The fares between Brazil and Europe from the Brazilian POS were higher than usual and TAP was commanding a premium due to high O&D traffic between both countries. It was not for nothing that AT was very hopeful that it could jump on the bandwagon.
Then AD and JJ came into the picture. Now fares have retreated back. Capacity has been increased. That’s why the fares are at current levels.
 
a350lover
Topic Author
Posts: 715
Joined: Sun Dec 24, 2017 11:21 am

Re: TAP announces 118 million € losses

Sat Mar 23, 2019 12:46 pm

MalevTU134 wrote:
a350lover wrote:
Is TAP maybe the legacy European carrier with the largest stake of its finances owned by a State (50% of it owned by the Portuguese Government)?

LOT - Polish Airlines is 100% government owned, unless I am mistaken.

https://corporate.lot.com/pl/en/ownership-structure


Very interesting. Another fast-growing project! It's fair to admit that when the money isn't much of an issue cause it comes from the Government... it's easier to expand! Nothing against that, as a matter of fact, back in the day, that was the case for every State-run National airline.
 
airbazar
Posts: 9621
Joined: Wed Sep 10, 2003 11:12 pm

Re: TAP announces 118 million € losses

Sat Mar 23, 2019 1:04 pm

Blerg wrote:
tomcat wrote:
MIflyer12 wrote:
Being a connecting carrier xxx-LIS-xxx isn't a winning strategy unless they are the low cost provider. Do you think their cost structure compares with the best TATL ULCCs?


Labor cost are generally low in Portugal compared to the rest of western Europe but I don't know if TAP itself benefits from this. It's a legacy airline after all. This being said, are they really competing with the TATL ULCCs? As far as TATL is concerned, TAP is on the following markets: Brazil-LIS-Europe; USA-LIS-Africa; USA-LIS-Europe. So far, the ULCCs competition is only on the USA-Europe market. Overall, TAP is not so exposed yet to the ULCCs on their TATL markets.


Yes but at the same time LCCs on transatlantic flights have not been very successful. Norwegian is losing money hand over fist, WOW is about to go bankrupt... the jury is still out on whether LCCs can make it over the Atlantic.

But TP is neither a LCC nor just a TATL carrier and they've been flying TATL for like 60 years. TAP like most other "global" network carriers have realized that the market has changed and they are competing for the same exact passenger that LCC's originally were intended for. As a result you have seen most of these "legacy" airlines adopt these no frills "basic economy" fares that match those of LCCs. TAP is hardly the only major carrier doing this.
The difference between TP (and TK), and other legacy carriers is that TP has very low operating costs due to the fact that they are based in a country with a very low labor costs. The two biggest expense items for any airline are labor and fuel. Having cheap labor costs, both onboard and on the ground is a huge economic advantage. Being closer to the Americas than their competitors also means that they burn less fuel.
The generalization that TP is cheap everywhere across the Atlantic is also wrong. TP is expensive in markets where they control the price point and cheap in markets where they don't. but that's true for every airline. Take BOS-LIS for example, a route that i am very familiar with. Between TP and DL, guess who is the cheapest? DL, by a long margin. But if you want really cheap then you can go via AMS/CDG/LHR with a connection. Like wise, to fly to the US with a connection in LIS is going to be cheaper.

a350lover wrote:
Very interesting. Another fast-growing project! It's fair to admit that when the money isn't much of an issue cause it comes from the Government... it's easier to expand! Nothing against that, as a matter of fact, back in the day, that was the case for every State-run National airline.

That's a very bad generalization. Not all state-run airlines are created equal.
It can actually be quite the opposite. Money is very much an issue and I'd argue even more of an issue when the airline is state-run.
Taking government money is illegal in Europe and they can't just go to the stock market to get capital when they feel like it as most publicly traded airlines do.
This is why the government tried very hard , for years to privatize the airline and now the airline is trying very hard to do an IPO.
 
Galwayman
Posts: 727
Joined: Fri Mar 10, 2017 10:20 am

Re: TAP announces 118 million € losses

Sat Mar 23, 2019 3:39 pm

MIflyer12 wrote:
Galwayman wrote:
The easiest way to reduce marginal costs is through expansion and economies of scale ... TAP need to hold their nerve now more then ever ...


The easiest way into bankruptcy for an airline is marginal-cost pricing. Airline economists had that figured out 40 years ago, after all sorts of carriers bought 747-100s because of low CASM and then couldn't begin to fill the seats.

Being a connecting carrier xxx-LIS-xxx isn't a winning strategy unless they are the low cost provider. Do you think their cost structure compares with the best TATL ULCCs?


Yes it definitely does . Norwegian is unviable . TAP and EI have the right cost structures and the best location . They’re both in the very best place
 
airbazar
Posts: 9621
Joined: Wed Sep 10, 2003 11:12 pm

Re: TAP announces 118 million € losses

Sun Mar 24, 2019 12:36 pm

Galwayman wrote:
MIflyer12 wrote:
Galwayman wrote:
The easiest way to reduce marginal costs is through expansion and economies of scale ... TAP need to hold their nerve now more then ever ...


The easiest way into bankruptcy for an airline is marginal-cost pricing. Airline economists had that figured out 40 years ago, after all sorts of carriers bought 747-100s because of low CASM and then couldn't begin to fill the seats.

Being a connecting carrier xxx-LIS-xxx isn't a winning strategy unless they are the low cost provider. Do you think their cost structure compares with the best TATL ULCCs?


Yes it definitely does . Norwegian is unviable . TAP and EI have the right cost structures and the best location . They’re both in the very best place


EI and TP have a proven business model but with lower operating costs than most "legacy" carriers. Norwegian is trying an unproven business model (TATL from SWF, hello!), while growing too fast. WOW was playing in a market segment that just doesn't have space for more than 1 airline. The 747-100 comment is absolutely correct which is why TP and EI are doing with A321's instead, which is what we will likely see B6 do as well.
 
tobsw
Posts: 54
Joined: Mon Jul 11, 2011 2:29 pm

Re: TAP announces 118 million € losses

Sun Mar 24, 2019 1:34 pm

a350lover wrote:
Very interesting. Another fast-growing project! It's fair to admit that when the money isn't much of an issue cause it comes from the Government... it's easier to expand! Nothing against that, as a matter of fact, back in the day, that was the case for every State-run National airline.


Except that, back then, the market was regulated.

Nowadays, when states invest or hold a big chunk of shares, I see it as a geopolitical investment: Emirates and Qatar Airways are probably the best examples. The same for LOT and TAP: hello world, this is LOT and I fly you via Warsaw. Hello this is TAP - I fly you via Portugal.

However, seeing the fares TAP is offering, as highlited by SQ83... it is not possible to make any profits. Selling a flight MAD to LON via LIS for little money is not profitable, especially a few days before departure (or even on the day of departure). Today you can fly to London for just 60 EUR, Ok, you will arrive tomorrow morning, but probably soon enough. They are obviously targetting the lower end... which I am not against to, but arguably difficult to make money.

As long as their is cash in the account, this strategy works OK. Now, when cash runs out, problems start. I doubt TAP will make profits for the next couple of years. They are expanding above organic growth with way too many cheap fares (I know, competition is tough). I can´t remember how many new US destinations they are launching this year....

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