LISBON (Reuters) -Portuguese airline TAP's second-quarter net profit fell 42.5% from a year ago, with costs increasing much more than revenues as it faced fierce competition in its main markets and
TAP Airlines Reports 42.5% Drop in Profit Amidst Competitive Pressures
TAP Airlines Financial Performance Overview
LISBON (Reuters) -Portuguese airline TAP's second-quarter net profit fell 42.5% from a year ago, with costs increasing much more than revenues as it faced fierce competition in its main markets and airport constraints at home, the flag carrier said on Thursday.
Revenue and Profit Analysis
TAP, which is being partially privatised, reported a net profit of 37.5 million euros ($43.9 million) between April and June, a period that this year included the busy Easter week. In the first half, TAP booked a loss of 70.7 million euros, almost three times more than in the same period last year.
Impact of Competition and Costs
Quarterly revenues increased 1.7% to 1.13 billion euros, as the number of passengers carried by the airline rose 4.5% to 4.3 million.
Privatization Efforts and Market Interest
However, operating costs increased 5.6% to around 1 billion euros as employee costs rose 18.3% and traffic costs rose 9.2%.
TAP said net profit was also impacted by foreign exchange losses that offset a reduction in interest expenses.
Chief Executive Luis Rodrigues said in a statement that TAP continued to operate "in a highly competitive environment" and was facing "one of the most operationally challenging summers in recent years, with severe border control constraints at Portugal's airports significantly impacting operations".
Like many other European countries, Portugal has been tightening border controls amid a public backlash against immigration, leading to queues and sometimes flight delays.
TAP expected competitive pressures in key markets to remain in the coming months.
Portugal relaunched the long-delayed privatisation of TAP in July, aiming to sell a 44.9% stake, with an additional 5% to be offered to TAP employees.
Lufthansa, Air France-KLM and British Airways owner IAG have shown an interest in the process.
($1 = 0.8542 euros)
(Reporting by Tiago Brandao and Sergio Goncalves. Editing by Andrei Khalip and Mark Potter)
