Why focus on Madrid? Unless I am mistaken, Spain is not a large driver of traffic to Brazil.
Madrid/Spain are way bigger markets than Lisbon/Portugal in any possible sense (business, tourism, VFR, etc.). So Spain-Brazil will always be WAY bigger than Lisbon-Spanish speaking LATAM.
In 2017 (latest figures in Wiki), MAD-GRU was substantially bigger than LIS-GRU.
MAD-GRU 637,428 PAX
LIS-GRU 417,788 PAX
Makes perfect sense from LH/UA point of view but it will spell the end for TAP and likely a disaster for Portugal's economy as TAP is it's largest exporter and a huge contributor to the tourism industry which accounts for ~20% of GDP.
Why do I say this? TAP is a big contributor to declining yields across the Atlantic. That's bad for LH/UA who have much higher operating costs and therefore need higher yields. By eliminating TAP they eliminate a significant low cost competitor and because TAP is so cheap to buy, it's an easy thing to do.
With Delta/VS trying to eliminate DY and Lh/UA trying to eliminate TAP, pretty soon we'll be left with nothing but 3 main alliances across the Atlantic and back to the high fares of old.
The Portuguese economy will end up in a disaster either way. The growth in the Portuguese economy has been a mix government debt, tax-breaks (those Golden visas and expats on that 10-year scheme not to pay income tax - now being partially withdrawn -), real estate bubble (prices in Lisbon or Porto are simply ridiculous specially compared with average salaries) and tourism boom. If there is a coronavirus global crisis a la 2008 (or worse), all this will fall like a house of cards.
IMO the only way for TP to survive is to "come back to basics" and what it was 10 years ago, and Lufthansa would be a good candidate. Focus in LIS (and drop OPO) and focus on their key markets: Brazil, North America and core Europe. Maybe adding some key markets in LATAM (like EZE or MEX) to compete with Iberia for Southern European connections.
People forget that TP was unprofitable for the first 72 years of government control. With the huge capex in 2019, it still improved it's performance, showing the article is political spin. Give it a few years, and if they continue performing, TP will keep turning around
You are forgetting TAP's insane growth over the last 5 years or so. TAP is not longer comparable to an Euro legacy but to Turkish, Emirates or Qatar. They just launch routes with 0 PDEW (Lisbon-Agadir?) just for the connections.
As other posters and myself have said from our experience, TAP literally gives tickets away.