The Portuguese government fired the CEO of state owned airline TAP Air, as a scandal over an irregular severance pay made to a former government official came to light.
During a press conference on Monday, 6 March, Portuguese Finance Minister Fernando Medina announced the news that both CEO Christine Ourmières-Widener and chairman Manuel Beja were fired with just cause, meaning that they themselves are not entitled to any termination compensation.
This episode has shaken the confidence of the Portuguese in TAP and it is essential, above all, to recover the bond of trust between the country and the company.
Fernando Medina, Portuguese Finance Minister
The incident involves former board member Alexandra Reis, who joined TAP in 2017 and had an active involvement in the airline’s restructuring, which included reducing the fleet, making more than 3,000 staff redundant and cutting wages in an attempt to return to profit. Although she had two more years left on her contract, she left the company the following year, asking for a severance pay of €1.5 million.
After negotiation, she was given a third of the compensation she had asked for. “As compensation for the termination of all the aforementioned contractual functions, and despite the initial claim of Alexandra Reis, amounting to €1,479,250, it was possible to reduce and agree an overall gross aggregate amount of €500,000 to be paid”, a TAP document stated at the time.
After inspection, the general finance inspectorate of Portugal established that even that amount was, in fact, illegal, so Reis must return €450,110.26 of the half million, according to Simple Flying. The news first came to light in December, forcing Reis to resign from her newly obtained position of Treasure Secretary of State. Infrastructure Minister Pedro Nuno Santos also quit at the time.
Over the past few months, TAP has been in the spotlight after the government announced the privatisation of the airline. Big groups like Air France-KLM, Lufthansa and British Airways owner IAG have repeatedly expressed interest in acquiring a majority stake in TAP. During the press conference, Medina ensured that “the path of stabilisation and privatisation of part of [TAP’s] capital is not in question”, adding that “the government expects to open the process of privatisation of the company soon”.
