TAP Air Portugal is facing criticism from the Portuguese government after it was revealed that the airline paid out €1.17 million in bonuses to 180 of its senior employees. Two staffers are said to have earned €110,000 each in bonus payments despite the fact the airline made a loss of €118 million in 2018.
The Portuguese government owns 50% of the airline and officials have called the bonus payments irresponsible for a State-owned company. The government, however, has very little say in how the airline is run and management decisions are private and not in the hands of the State.
In 2015, shares in TAP Air Portugal were sold to a consortium led by David Neeleman who founded jetBlue and Brazil’s Azul Airlines. Neeleman is leading a transformation programme of the airline, overseeing an ambitious expansion programme.
The airline has now been forced to issue a public statement, saying that the payment of bonuses is common practice in the aviation industry even during times of losses. TAP Air Portugal says that since 2017, bonuses are made up of group performance, as well as individual performance.
Because of 2018’s huge losses, there was no bonus payment for company earnings but there were still rewards for area earnings and individual performance. These payments were linked to cost reduction measures and increase revenue performance says the airline.
In fact, the airline says criticism has been unfairly levelled at its bonus programme because the information was “illegally disclosed” and contained inaccurate, wrong, deleted and out of context information. The programme will actually be expanded this year and executives think this is a crucial measure to encourage the transformation of TAP Air Portugal.
Pedro Nuno Santos, Portugal’s Minister of Planning though remains unconvinced, telling the Portuguese daily the JN that the actions of the airline’s management “is a breach of the trust between the Executive Committee and the largest shareholder of TAP, the Portuguese State”.