Any doubts about the urgency of selling Azores Airlines have been dispelled by the 2024 accounts just released. The Group’s loss of €80 million is equivalent to almost 50% of all hotel revenues, nearly 10% of the GVA from tourism, enough to build a large state-of-the-art hospital (the CUF hospital cost half that) and 10 health centers (the one in Lajes do Pico is valued at €8 million). This is the scale of the waste of money that the Region has achieved through the disastrous management of previous SATA administrations, which left a trail of irrecoverable deficits. The administrations of Luís Rodrigues and Teresa Gonçalves never implemented the restructuring plans required by Brussels, leaving Azores Airlines in a state of limbo. This resulted in three measures that proved disastrous for the company and had a scandalous impact on its accounts.

The first has to do with an early retirement pension model that will continue to be the subject of much debate, some of which will be resolved in court. Some employees took early retirement before the age of 55, with all benefits, and new employees had to be hired to fill the vacant positions. In other words, a double loss. Another disastrous impact on the accounts was the new routes, in an operation that made no sense, without any market research, and which proved, without exception, to be a financial disaster. There were two handfuls of new routes, all of them loss-making. At the time, this operation caused astonishment in aviation circles due to the irrational use of the company’s resources on roads that had nothing to do with the Azores, such as Porto-New York, Porto-Boston, Porto-Toronto, Funchal-New York, Funchal-Boston, and Funchal-Toronto. To complete the ruinous dozen, we also have Ponta Delgada-Milan, Ponta Delgada-London, Terceira-New York, and Terceira-Toronto.

To make matters worse, there is also the chartering of aircraft (ACMIs) to satisfy this fantasy, at a cost of millions. Finally, another poorly conducted case: the “Cachalote” case. As there was no settlement before going to court, due to SATA’s fault, the outcome could not have been otherwise: the London Administrative Court ruled in favor of the owners of the “Cachalote” (Hifly), ordering compensation and payment of all costs. Another handful of millions of euros. What all this reveals, apart from poor management, is a complete detachment from the authorities, who watched all this unfold unperturbed and serene.

The Regional Government, faced with this debacle, should have intervened long ago, instead of failing to provide the guidance needed to correct the misguided course. By 2023, all the alarm bells, a kind of ‘Ground Proximity Warning System’, had been set off, with personnel costs increasing by €18 million (+22%), an impact of €6 million in early retirement, €27 million in ACMIs, and €9 million in compensation. What company can withstand this? Faced with this situation, the current management will have to put the brakes on and never give up on the more than 40 measures in its Sustainability Plan to recover what it can. As Rui Coutinho rightly said, some will be “painful,” but it is the only way to regain some of the losses and not continue in the reverie of recent years.

The results of these first months of the year may already give a good indication. The unions, for their part, will have to reflect on the company’s situation and refrain from making unreasonable demands (as is already expected), otherwise the company will be closed before it can be sold. The Regional Government is required to pay more attention and speed up the privatization process, transforming €160 million of the debt (€342 million in total) into share capital, as already approved by Brussels, transfer the rest to the holding company and pray that, in private hands, the company will make a profit, so that it can benefit from any dividends, as a 49% shareholder, to pay off the debt. Otherwise, as has become customary in Azorean public companies, those who will suffer from such ruin will be the usual suspects: the common people!

Osvaldo Cabral is an emeritus journalist with over 40 years of experience covering the Azores. He was the director of RTP-A (the public television station) and the Diário dos Açores newspaper. He is a regular columnist for many newspapers throughout the Azpres and the Diaspora.

NOVIDADES will feature occasional opinion pieces from various leading thinkers and writers in the Azores, providing the diaspora and those interested in the current state of the Azores with insight into the diverse opinions on some of the archipelago’s key issues.

Translated to English as a community outreach program from the Portuguese Beyond Borders Institute (PBBI) and the Modern and Classical Languages and Literatures Department (MCLL).