Portuguese airline TAP reported a rare third-quarter net profit on Wednesday, boosted by strong sales and a currency hedge, but the outlook for next year remained low.
The state-owned enterprise, which is undergoing restructuring, reported a profit of 111 million euros ($110 million), compared with a loss of 134.5 million a year earlier.
TAP’s operating revenue jumped to 1.1 billion euros from 444 million euros a year earlier, largely thanks to higher fares and more capacity as demand for travel rebounded after the lifting of COVID restrictions, even amid high inflation.
Recurring earnings before interest, taxes, depreciation and amortization (EBITDA) of 280 million euros were above the pre-pandemic level.
“TAP confirms its strong performance in the third quarter with all financial metrics above pre-crisis levels, despite further increased fuel costs,” CEO Christine Ourmieres-Widener said in a statement.
She added that while demand remains very strong in the fourth quarter, “the outlook for next year is still low, and given the uncertain situation, it is increasingly important to focus on our strategic plan, which has proven to be effective so far.”
TAP’s restructuring as part of a €3.2 billion rescue plan approved by Brussels includes shrinking its fleet, cutting more than 2,900 jobs and cutting the wages of most workers by up to 25%. It must also cease its aircraft maintenance business in Brazil.
The CEO said in September that TAP was meeting its goals, making it more attractive to a potential international partner, while it was up to the government to decide if and when to privatize TAP again.
Part of the plan is that TAP must achieve positive operating results in 2023 and a net annual profit in 2025 and recover from a record loss of 1.6 billion euros in 2021.