The privatisation process of Portuguese carrier Azores Airlines is happening and there is resistance from different segments, specifically from the existing employees.
The divestment of the State’s 51% stake in Azores Airlines is foreseen in the company’s restructuring plan, approved last June by the European Commission. That month, the institution approved state aid from Portugal totalling 453 million euros in loans and guarantees to support the corporate restructuring of SATA, the company’s owner.
On this development, in a statement sent to the press, the Workers’ Committees of Azores Airlines and SATA Air Açores expressed
“deep concern about the future of the SATA Group. In light of the news published in Diário Insular on December 28, involving Dr. Artur Lima, a member of the Regional Government of the Azores and SATA’s sole shareholder, we reaffirm our firm opposition to political interference in the management of a company that is vital for the connectivity and socio-economic development of our outermost region.”
Workers’ Committees of Azores Airlines and SATA Air Açores added, Firstly,
“SATA transcends the role of an air transport company. It is a symbol of the historic and vital link between the Azores, Madeira, the mainland and the Diaspora. Its mission is fundamental to tourism and the socio-economic progress of the island regions, being an anchor of survival and prosperity. Defending SATA means preserving our heritage and ensuring the future of our regional identity,” they reveal.
“The growing interference of political interests in SATA’s management has put the company’s operation and sustainability at risk. Decisions guided by partisan agendas, to the detriment of technical and economic criteria, generate inefficiency mismanagement and jeopardize the company’s future. We are concerned to ask whether the President of the Regional Government of the Azores agrees with his Vice-President’s statements that TAP provides a better service to the Azores than SATA. Such a position, if true, not only ignores the sacrifices and hard work of SATA’s workers, but also disregards the company’s crucial role in the daily lives of the Azorean people and in regional development,” the workers state.
Although SATA started its journey as a private carrier, it was taken over by the Azores administration in 1980. Initially, ownership was shared between the regional government and TAP Air Portugal, the country’s largest airline.
SATA has struggled since year 2014 when the airline, wholly owned by the Azores regional government, began to record losses, which worsened during the Covid-19 pandemic.
In June 2020, the Azores Government announced it was abandoning the second attempt to privatize Azores Airlines after a first tender was cancelled in November 2018. In June this year, the regional government president confirmed that the European Commission had placed a requirement on privatizing up to 51% of Azores Airlines’ share capital.
Meanwhile, on Privatization, Workers’ Committees of Azores Airlines and SATA Air Açores has a demand of an independent management,
“We demand independent management, led by experts in the sector and based on sound technical and economic principles. The company’s autonomy is essential to guarantee financial stability and the fulfillment of essential services. We also express our surprise and concern at the hasty sale of Azores Airlines to an interested party who had previously shown interest, but whose proposal was, at the time, rejected by the Region itself.”
The workers state that
“this setback raises serious questions about the criteria adopted for the sale and the real objectives behind this decision. Furthermore, we consider the intention to separate and sell off SATA’s handling unit to be completely unbalanced, inappropriate and damaging. This service is an essential part of the company’s integrated operation and its financial viability. Its separation would further weaken SATA’s structure, harming workers, the quality of the service and, ultimately, the people of the Azores who depend on this operation.”
Union also demands transparency and accountability:
“The population has the right to know the true intentions behind political decisions that directly affect SATA’s future. We demand greater transparency in the actions of the government and in the management of the company, with the guarantee that all choices are made on the basis of detailed and consistent studies that consider the needs of the population and the sustainability of the service.”
“It is urgent that SATA be part of a national transport strategy that takes into account regional specificities. The company’s future needs to be guided by a public aviation policy that ensures regional development and the interconnection of the Azorean archipelago, Madeira and the mainland with quality, regularity and efficiency,” they appeal.
“This manifesto is an appeal to defend what is fair and necessary: a strong and independent SATA, capable of being a pillar of national and regional connectivity, promoting unity between the islands and with the rest of the world. We cannot allow a company that is essential for the development of our region to be used as a political instrument or to be at the mercy of partisan interests and hasty, poorly structured privatizations.”
“We conclude this manifesto with an appeal to civil society, regional entities and the central government: Do not allow SATA to become a pawn in the political war. We are fighting for the right to a better future, one that ensures our airline the place it deserves, with autonomy, responsibility and a firm commitment to the needs of island communities,” they conclude.
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As per the Aviation and Airport Workers' Union (SITAVA) which is against the resumption of the privatization process of Azores Airlines,
“The lack of strategic vision, the lack of preparation of the administrations and the systematic and grotesque political interference produced this result. In the space of six months they cancelled the privatization tender, took it for granted and went back on their word! ”
SATA Azores Airlines will eliminate the loss-making routes mostly flown on ACMI flights (aircraft rental with crew, maintenance, and insurance included); Diário dos Açores has learned from sources familiar with the matter.These routes have contributed the most to the company’s worsening results.
The decision comes as part of the operating plan for IATA Summer 2025, which is practically closed, where the main focus is on “consolidating and enhancing the Azores hub,” according to the same sources.
Grupo SATA carried 2.1 million passengers in the first nine months of 2024, reaching this figure for the first time in its history. Compared to the same period last year, this figure represents an increase of 14%.
In terms of revenue, last year’s growth trend continued, with more than 350 million euros, representing an increase of around 17% compared to the same period in 2023.
The available capacity increased by 12% compared to the first months of 2023, resulting in an overall increase in the Group’s average load factor of 1.5 p.p. to 80.9%.
Some extraordinary events with a negative impact on the operation and the evolution of the operational and regulatory cost structure led to a drop in consolidated EBITDA to 17.8 million euros up to September 2024, compared to 40.4 million euros in the same period last year.
Azores Airlines continued to show high pressure on costs after the first half, marked by irregularities caused mainly by weather issues and delays in completing maintenance work.
Operating costs for the third quarter increased by 28.6 million euros (31% more) compared to the same period in 2023, mainly due to the following factors: 5.7 million euros more in personnel costs, 5.4 million euros more in ACMI costs, 9.4 million euros more in direct fuel, handling, and catering costs.
The accumulated net profit to September is negative by 43.6 million euros, compared to a negative 11.1 million euros in the same period last year, as a result of the reduction in EBITDA, the increase in depreciation costs, which results from the increase in the available fleet, and impairments. Conversely, there were improvements in the Group’s financial expenses.
The rise in costs is mainly the result of an increase in personnel costs (up 2.6 million euros, 18.1% more) and irregularities/indemnities. ACMI of 1.8 million euros compared to the 3rd quarter of 2023, and aircraft maintenance costs of around 2.1 million euros (82% more), resulting from unscheduled maintenance events and charges for engine rentals necessary for the continuity of operations.
In June 2022, the Regional Government agreed with the European Commission to sell the majority of the capital of Azores Airlines, as part of the financial rescue of the company following the Covid-19 pandemic. Something that the union structure contests.
“It is important to demystify that the European Commission (EC), by virtue of the European Treaties, does not require (nor can it) the privatization of anything. It was, in fact, the Portuguese Government that placed the objective of privatization in the company's restructuring process. "
"A political decision that, if implemented, will transform the Government into the executioner and gravedigger of the SATA Group and the Azoreans”, says the statement.
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