Azorean businesspeople are worried about the eventual collapse of Azores Airlines, whose privatization process has once again become desertedand the impact that its possible closure would have on the local economy. According to a report from the Angra do Heroísmo Chamber of Commerce, a possible closure of Azores Airlines, a company belonging to the Azorean group SATA, could have an impact of around 1.27 billion euros and cause the direct loss of 815 jobs.
The business association warns of the risks, saying that the “disappearance” of Azores Airlines, whose privatization is being negotiated, has a “systemic risk” and “would affect the entire Azorean economic fabric”.
“The collapse of SATA Internacional (…) would have an estimated total economic impact of 1,266 million euros, corresponding to more than a quarter of GDP [Produto Interno Bruto] regional and half of the annual revenues of the Autonomous Region of the Azores”, reads the study sent to the media by that business association.
The report highlights that the approximately 1.27 billion corresponds to “the set of direct and indirect losses associated with the collapse”, arguing that the closure of the company “would not just be a business problem, but a large-scale economic and social shock”, with “immediate effects on mobility, tourism, tax revenue and employment”.
The analysis estimates that the closure of the carrier would imply the loss of 815 direct jobs and the “risk of partial collapse” of the other company in the group, SATA Air Açores, responsible for inter-island connections.
The closure of the company, the report also says, would lead to the “destruction of 436 million euros in assets and equity”, the “transformation of 75 million in regional guarantees into public debt” and a 20% drop in the region’s tourist flow.
“Even after three years, around 40% of the initial losses would remain uncompensatedhighlighting the seriousness and persistence of the risk for the Azorean economy”, warns the Chamber of Commerce.
At issue may also be other “structural consequences”, such as the “erosion of external confidence”, the “discontinuity of rapid regional exports”, the “increased isolation” and the “increased budgetary pressure” on the Regional Government (PSD/CDS-PP/PPM).
Association of businesspeople defends privatization
The report suggests the completion of the privatization process, the legal “isolation” of SATA Air Açores, the creation of a Regional Mobility Stabilization Fund and a Contingency Plan for the Airline Sector.
The Chamber of Commerce and Industry of Angra do Heroísmo argues that privatization is the “only possible way to save the company” and calls for “the interest of the Azores to prevail over any personal and obscure interest”.
“It is important to express enormous concern about the intention of asking the European Commission to extend the term of the privatization process, with the aim of opening space for direct negotiation”, he laments.
The business association, which criticizes the role of the political class, administrations and unions in the company’s current state, considers it “evident” that the region will have to assume the company’s liabilities.
“The payment of the debt and the assumption of possible compensation for management errors committed constitute, at this moment, the lesser evil for the Azores and, in our opinion, the only possible path, in order to avoid greater future problems for the region”, highlights the organization led by Marcos Couto.
The jury for the privatization competition required the Newtour/MS Aviation consortium to present a proposal for the purchase of Azores Airlines by October 24th, a source linked to the process revealed to the Lusa agency on October 13th.
In June 2022, the European Commission approved Portuguese state aid to support the airline’s restructuring of 453.25 million euros in loans and state guarantees, providing for measures such as a reorganization of the structure and the divestment of a controlling stake (51%).
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