Evaluating the privatization of the portuguese national airline - TAP

• Autor(a) principal: Cunha, Jorge Miguel Valério e
• Data de Publicação: 2015
• Tipo de documento: Dissertação
• Idioma: eng
• Título da fonte: Repositório Científico de Acesso Aberto de Portugal (Repositórios Cientìficos)
• Texto Completo: http://hdl.handle.net/10071/11384
• topic: Privatization; Corporate valuation; Multiples analysis; Discount cash flow; Privatização; Avaliação de empresas; Múltiplos; Método dos fluxos de caixa descontados

Portugal’s deficit economy during several years and the high levels of Public Debt culminated with the need of an External Financial Assistance Program. Regarding this program a privatization plan of several state-owned companies was developed, in which TAP Group was included. The main activity of TAP Group is air passenger and cargo transport. It also provides services to third party customers in areas related to the Group’s core activities, such as Maintenance and Engineering services. The Letter of Intent sent by Portuguese Government to International Monetary Fund (IMF), concerning the Portugal’s Financial Assistance Program, and the State Budget for 2015 refer the need to restart the process of TAP privatization. On November 13th of 2014, the Council of Ministers approved the re-privatization process of TAP. Consequently, in order to sell TAP Group at its fair value, it is essential to perform a financial corporate valuation. This way, in the next pages, it will be developed a valuation of TAP, using three corporate valuation methods: Multiples (or Relative) Analysis, Discounted Cash Flow method, using the Free Cash Flow for the Firm approach and the Free Cash Flow for the Equity approach, and a valuation method used to valuing firms with regular negative earnings, which is the case of TAP Group. Considering the negative TAP’s fair value estimated in all methods, Portuguese Government should simply transfer its capital and inherent obligations to the investors. However, TAP is valuable if it becomes more efficient, which is expected to occur in a privatization process.