The collapse of Azores Airlines would have an economic impact of around €1.3 billion, according to a study released by the Angra do Heroísmo Chamber of Commerce and Industry (CCIAH), which calls for the privatization of the airline, with transparency and within the deadlines set by the European Commission.

“The liquidation of S4 [Azores Airlines] would have a devastating impact on the Azorean economy, estimated by this chamber of commerce at more than €1.3 billion, which would, in practice, equate to a brutal increase in the region’s financial deficit and inevitable external intervention,” warned the business association in a press release. The jury for the privatization tender for Azores Airlines, part of the SATA group, gave the Newtour/MS Aviation consortium until October 24 to submit a bid to purchase the airline.

With the deadline just days away, the Angra do Heroísmo Chamber of Commerce and Industry appealed in a press release “for the interests of the Azores to prevail over any personal and obscure interests, and for a transparent, competent, and future-oriented privatization process to be ensured, closing the ongoing process,” which it considered “the only possible way to save the company and preserve its autonomy.”

For the business association, “delaying the privatization process will only prolong the need for financing for the company, which will continue to accumulate significant losses, aggravating its liabilities and compromising its operational viability.”

“Every day of delay translates into new costs for taxpayers and greater pressure on regional public finances, which are already fragile. Ultimately, this postponement will inevitably place the responsibility for continuing to finance an unviable company in its current form on the region’s debt,” it stressed.

Business leaders also expressed concern about the Regional Government’s intention to ask the European Commission to extend the privatization process, due at the end of 2025, to allow for direct negotiations.

“This possibility will not be accepted in Brussels, since the process of state aid and restructuring of the company has already been the subject of a binding decision and timetable. Rather than a solution, this request would represent, two months before the deadline for privatization and two years after its start, a further postponement of the truth and a sign of weakness, increasing the risk of the company’s definitive loss and compromising the Region’s credibility with European institutions,” they warned.

The business association argued that the region “will inevitably have to assume the liabilities” of Azores Airlines, given “the enormous state of deterioration in which the company finds itself.”

It also admitted that, “given the sharp devaluation recorded between 2022 and the present,” it is ‘expected’ that “the public treasury will still have to bear additional costs resulting from management errors committed during this period.”

Nevertheless, he argued that “the payment of the debt and the assumption of any compensation for management errors committed” are “the lesser evil for the Azores” and “the only possible way to avoid greater future problems for the region and for all Azoreans.”

“It is important to emphasize that a possible liquidation of the company would have an impact of more than €1.3 billion, while assuming the liabilities and devaluation would represent an effort of close to €700 million, or approximately half that amount,” he explained.

For the CCIAH, SATA Air Açores “is a strategic asset for the region, of a public and social nature, and cannot, under any circumstances, be dragged into the financial fragility that affects S4.”

“SATA Air Açores is the company that guarantees, every day, the connection between the islands and the territorial continuity of the Azores, so it cannot be a collateral victim of SATA Internacional,” he stressed.

In yesterday’s press release, the business leaders do not hold back on criticism and speak of “a path marked by irresponsibility, lack of vision, and absence of strategy on the part of all those involved in the process over the years.” Not even the former PS governments are spared. They are accused of using the company as a “political weapon” and “an instrument of favoritism and patronage.”

“With rare exceptions, such as the periods of Luís Rodrigues and Mário Chaves, administrations were appointed without technical competence or business vision, transforming Azores Airlines into an extension of political power, a tool for perpetuating power,” they accused.

The current government, formed by a coalition of the PSD, CDS, and PPM parties, is accused of having committed “the serious mistake of suspending the privatization process already underway,” a decision that “represented a structural setback at a time when Azores Airlines needed stability and capitalization.” According to the business association, the current management of the SATA group demonstrates “a lack of leadership and competence.”

“It presented a savings plan of €65 million, but the truth is that the company recorded a loss of €41 million in the first half of 2025 alone. To date, it has failed to eliminate the internal lobbies that continue to cost the company millions of euros annually, nor has it demonstrated the ability to successfully complete the privatization process,“ it criticized. The CCIAH believes that the unions also bear ”a very significant share of the responsibility.”

“They negotiated/demanded absolutely ruinous company agreements, without any concern for the company’s sustainability, and resorted to the threat of strikes at critical moments for the economy and for Azorean entrepreneurs, particularly during the peak summer season, causing direct damage to the region and its business fabric,” he stressed. Business owners also criticized regional deputies, accusing them of not being “up to the gravity of the situation.”

“The inquiries carried out were superficial and lacking in depth, limited to fulfilling political formalities, without demanding from the company’s management and administration the answers that the region deserved,” they denounced.

CONSEQUENCES OF THE CLOSURE OF AZORES AIRLINES

20% loss of tourist flow to the region

The study released by the Angra do Heroísmo Chamber of Commerce and Industry estimates that the collapse of Azores Airlines would have an impact of €1.266 billion, “corresponding to more than a quarter of the regional GDP and half of the annual revenue of the Autonomous Region of the Azores.”

“The weight of the economic (50%) and financial (40%) impacts shows that the disappearance of S4 is not just a business issue, but a systemic risk that would affect the entire Azorean economic fabric,” the document reads.

Among the immediate effects, the study highlights: “the destruction of €436 million in assets and equity within the SATA group, the transformation of €75 million in regional guarantees into actual public debt; the loss of 815 direct jobs; the risk of partial collapse of SATA Air Açores; and a 20% drop in tourist flow, with a direct impact on hotels, restaurants, transportation, and local commerce.“

In addition to the immediate impact, the collapse of the company would also cause ”erosion of external confidence among investors and tour operators; discontinuity of fast regional exports, particularly of perishable and high value-added products; increased geographical isolation, with repercussions on the mobility of residents, students, and health professionals; and increased budgetary pressure on the Regional Government, which would have to ensure essential routes and guarantee substitute connections on a temporary public service basis.”

Among several recommendations, the study suggests creating a Regional Mobility Stabilization Fund, partially financed by tourism revenues and environmental taxes, to respond to contingency situations in air transport.

It also proposes a Regional Contingency Plan for the Air Sector, which aims to ensure the continuity of air links in the event of Azores Airlines’ collapse or a prolonged interruption of its operations.

Translated into English as a community outreach program by the Portuguese Beyond Borders Institute (PBBI) and the Modern and Classical Languages and Literatures Department (MCLL), in collaboration with Bruma Publication and ADMA (Azores-Diaspora Media Alliance) at California State University, Fresno. PBBI thanks Luso Financial for sponsoring NOVIDADES.