Portugal airline TAP's profit drops on forex losses, higher wage costs
Wage costs surged as post-pandemic pay cuts were reversed
Operating income rose 2% to 1.284 billion euros
Recurring EBITDA margin fell to 29% from 31% a year ago
LISBON, Nov 18 (Reuters) -Portugal's flag carrier TAP reported a 35% slump in third-quarter net profit on Monday to 118 million euros ($124 million), hurt by foreign exchange losses and a big jump in wage costs.
Operating costs rose 6.5% at the airline, which is slated for privatisation, to 1.05 billion euros. That was driven by a 26% surge in wage costs after the reversal of pay cuts imposed under a tough restructuring plan following a pandemic-induced bailout.
The airline's operating income rose 2% to 1.284 billion euros on a 0.5% increase in passenger revenues. Passenger numbers rose 1.3% to around 4.6 million in the quarter and TAP said bookings for the fourth quarter were slightly higher than a year ago.
Chief Executive Luis Rodrigues said management was pleased with the performance, "despite the two major challenges we faced: the difficult situation of managing European airspace, and significant currency devaluations."
TAP's recurring earnings before interest, taxes, depreciation and amortisation (EBITDA) fell 4.8% to 372 million euros and its EBITDA margin - a measure of profitability - fell to 29% from 31% a year ago.
Portugal's new centre-right government plans to resume TAP's privatisation in 2025 and said it had received interest from over a dozen potential buyers, including Lufthansa LHAG.DE, Air France-KLM AIRF.PA and British Airways owner IAG ICAG.L.
($1 = 0.9465 euros)
Reporting by Patrícia Vicente Rua; Editing by Andrei Khalip and Bernadette Baum
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