TAP Air Portugal (TP, Lisbon) has cut its share capital to zero “to partially cover” its losses, replenished a third of it with state funds, and will receive further funding over the next two years to take its share capital to around the same level as before, it outlined in a filing to Portugal’s securities commission (Comissão do Mercado de Valores Mobiliários - CMVM).

The disclosure, dated December 27 but published on the CMVM website early the following day, explained that following an approval of state aid from the European Commission on December 21 last year, TAP had reduced its share capital from the current level of EUR904,327,865 (USD961,641,766) to zero.

The capital stock will now grow from zero to EUR980,000,000 (USD1.043 billion), fully subscribed by the Portuguese state via the Directorate-General for Treasury and Finance - the airline’s sole shareholder - in three tranches: EUR294,000,000 (USD313 million) by the end of 2022; EUR343,000,000 (USD365 million) on December 20, 2023; and another EUR343,000,000 on December 20, 2024.

This phased injection of financial aid was already provided for in the company’s restructuring plan, in turn approved by the authorities in Brussels, the note said, adding that these operations “translate into a reinforcement of TAP’s capital structure.”

“As a result of the operations, TAP’s share capital now amounts to EUR980,000,000, represented by 196,000,000 shares with a nominal unit value of EUR5.00, of which EUR294,000,000 has been paid up,” it clarified.

The company’s Articles of Association were also amended to accommodate these changes. Under European Union rules, TAP cannot receive any more state aid for the next ten years.