Azores Airlines (previously known as the SATA group) has been losing in the high tens of millions annually and will sell their controlling stake of the airline to private investors.
What could this mean for you, a normal person?
The up side and what to expect:
– The airline will more than likely become more efficient, and although many flight paths will be disrupted over the next 3 – 5 years, there is a chance of better connectivity in the future.
– Portuguese Tax Payers won’t have the ongoing burden (although they will cover this large debt as part of the deal).
– House price market decline on the Azores islands: With major flight disruptions and higher fare costs the Azores will see a drop in tourism, which, alongside the already falling profits generated from rental properties will further aid the rising disinterest in purchasing investment properties on the archipelago. (Specifically the remote areas of São Miguel, which analysts currently expect to be the first to see a noticeable decline in property prices)
The down side and what to expect:
– Mentioned already, the increase in costs of a private business will fall on the customer, so yes, we can expect to pay more for tickets in the near future.
– Private owners reduce or drop routes which are less profitable (that’s the Azores islands!). The only upside of lower connectivity is the fall of tourism and drop in house prices that will follow it.
– Loss of labour: Private companies often try to cut costs, that often means that some of the once secure jobs for the local population may be reduced.
– If it all goes wrong? Private companies are not supported by the taxpayers money, so if the company is badly managed and has to sell material assets, we could lose these connections altogether.
Finally, for us, as many people on the Azores view SATA as more of an Azorean institution than simply a company, selling to private investors is a risk they have been willing to take but we are tentatively watching to see if it pays off.
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If you’re more interested in house the collapse of the Azores property market, check out our most recent article about falling house prices in São Miguel here.