TAP Portugal
Luis Costa
MBAA 518 Financial Management
Embry Riddle Aeronautical University

Table of Contents
Abstract 3
Introduction 4
Firm Information 4
Leadership 6
Human Resource Management 7
Organizational Structure 9
E-Commerce 11
Culture & Ethics 12
Global Strategies 13
Politics 16
Conclusion 16
References 18

Abstract
TAP Portugal, the Portuguese main airline carrier, first took to the skies in 1945 and changed management in 2000 with the current CEO, Fernando Pinto. It has since become an icon for the Portuguese people as a modern and quality carrier. Operating regular flights to 35 countries, TAP expands its network system through Star Alliance by means of a growing number of code-shared operations. It meets today’s challenges and competition by continuously investing in innovation and modernization effective through its human element and technical resources. Ethically conscience, the organization moves forward providing a variety of product and equipment improvements and embraces the environment with its green initiative program. It offers a collection of features suited for any customer need, driven by its customer driven policy, providing an experience one is sure to remember. Despite an impending privatization sale, TAP strives to move forward and continues to rise as a strong international competitor within the fierce aviation industry.

TAP Portugal
Since the birth of flight in 1903, air travel has emerged as a crucial means of transportation for people and products (Harris, n.d.). The airline business is a major industry that millions of people use for transportation and way of living. The international aviation sector, in today’s economic world, provides services to nearly every corner of the globe. It’s an important part of the global economy and one, which impacts related industries such as aircraft manufacturing, fuel companies and tourism, to name just a few. One of the growing international aviation companies in Europe today is Transportes Aéreos Portugueses, SGPS, S.A. known as TAP Portugal, the Portuguese flagship carrier, who started operating in 1945. This report will make an attempt to discuss its history, brief description of the firm, and impact it has had in today’s economic playing field. It will go into some detail of the organization’s design, marketing strategy and its current situation with privatization as well as its website access to the innovation of making passengers more comfortable during their flight and everything in between. Methods used in this research were mainly the use of the Internet with some added personal experience of flying with both TAP and its partner airline or commercial alliance, SATA. Documentation was mostly gathered from official TAP and news websites. It consisted of TAP’s 2011 annual report, its Code of Ethics, history, mission and principle and TAP Group structure. Furthermore, various news articles and videos were used to capture the TAP’s CEO interviews and the firm’s seemingly everlasting privatization sale of the government owned airline.
Section II Firm information
According to the company’s 2011 annual report, TAP was founded on 14 March 1945 and instituted on 26 April 2003 as TAP Group, through the incorporation of the holding company, TAP, SGPS, following a business restructuring process. Included in the TAP Group is the company TAP–Transportes Aéreos Portugueses, S.A. (TAP Portugal), whose core activity is the air transportation of passengers and cargo. The Company participates in the aeronautical maintenance business and other activities linked to the core business of the Group (tapportugal, 2013). It’s comprised of several departments ranging from passenger service to aircraft engine overhaul and includes a separate division of cargo, known as TAP Cargo. Tap Cargo, an extension of the company, provides the transportation of goods on TAP Portugal and its partner aircraft. Its mission and vision is to provide a reliable service in the collection, transportation and delivery of goods on time and according to the customer’s needs all at a competitive price (TAP Cargo, 2013). Its services include general, perishable and valuable cargo with a security escort service upon arrival and departure. Furthermore, human remains, newspaper, live animals and dangerous goods are also transported under their standard cargo shipments. Other products and services range from priority mail to charters. TAP Maintenance & Engineering is the maintenance, repair and overhaul organization of TAP. It’s based out of Lisbon, Portugal and employees approximately 40,000 individuals. What makes this organization special is the fact that they are responsible for the entire TAP fleet of over 50 Airbus aircraft. The quality of work has been recognized internationally by both customers and manufactures earning them the “A310 Operational Excellence Award” in 2005 as well as the Best Engine/Aircraft Source of Repair for the NATO AWACS (Airborne Early Warning and Control) Depot Level Maintenance Program certification in 2006 (Tap, 2013). Market share is felt across the global but has its strongest foothold in Africa and became the leading airline three years in a row to service the country. It also has received several other awards as “Best Airline in Europe” in 2012 by global travel magazine as well as “World’s Leading Airline to South America” (TAP, 2013). The main operating airport, based in Lisbon, capital of Portugal, is the main hub, out of 3 Portuguese ones, allowing the company to access markets located throughout the globe. The hub provides a network that currently services 78 destinations in the European, African, and North, Central and South American continents. Its competitors consists of easyJet, Transavia, Lufthansa, British Airways and Air France with the strongest one being easyJet and weakest Air France (whichairline.com, 2013). The company is a traditional setup with a CEO and heads of committees.
Section III Leadership and Management Philosophies
CEO and chairman of the executive board of directors, Fernado Pinto, leads the company. He took over TAP Portugal in Oct 2000 and has transformed the company through various programs. The company leadership considers knowledge to be an extremely important part at TAP as is the learning process. The company believes in learning from each other through employee experience. CEO, Fernando Pinto states it best as:
In strict compliance with its objectives and according to strategic guidelines directing the development of its activity, TAP Portugal assumes as basic positioning the development of a proactive approach to the creation of economic and social value which, at the same time, supports this corporate objective - extensive to the entire universe of TAP Group and transversal to all the areas of activity covered, with its clear commitment to the Community and in defence and in favour of the protection of the Environment (Corporate Governance & Sustainability Report, 2011).
The company’s top priorities are to keep the managers honest through the pursuit of responsibility and commitment to the strategic guidelines. For this purpose, TAP adopts the best environmental practices in its day-to-day activities and uses its resources to promote the protection of the environment without compromising the company’s ethical principles. This ensures its corporate policy and compliance with the regulations and TAP’s Code of Ethics. The organization is aware of its role in the community and country and continues to strive for excellence. They understand their role in the economy and tourism, namely as the largest national exporting company and as a major employer, and invest in the continuous progression of its staff. TAP has defined ambitious targets for 2012, confident that it will be able to not only achieve them but also overcome this challenge, continuing to assert itself as one of the leading companies in its sector of activity (Corporate Governance & Sustainability Report, 2011).
Section IV Human Resource Management
Within the highly competitive environment in which, TAP operates in; it considers its employees as the key to success. The multiple challenges that the company faces requires a solid Human Resource Management (HRM) team that tackles the questions, values and opportunities presented. The Company's HRM’s objective is to respond and reward employees that put forth the effort in investing in the company. Policies are designed to maximize the impact of the action of all employees that show a consistent change in their work environment. This consists of showing an increased interest in their work, greater aptitude in the management of their career path in the Company, and greater willingness to invest their continuous development. It comes down to developing, recognizing and promoting their deserving employees. In keeping with this train of thought, they have created several areas to aid with the policies set forth for their employees and potential workforce. In 2011, the creation of the Talent Management area gave attention to those that contributed the most in terms of initiatives and ideas. It employs the strategy of a friendly competition within the firm, which, in turn fosters talent and identifies and retains high performers thus improving the company’s adaptability and agility. This promotes a competitive advantage in a competitive market. It also increases the chances for employees to move up in the company chain and broaden career paths breeding confidence between the company and its people. Another area introduced by the human resource management team was the Performance Management area. Conducted on an annual basis, employee work performance is assessed in specific tasks and individual needs and strengths are identified.
Training, in line with the Company's strategy, remains a priority within the context of the TAP Group companies, representing an important driver for their competitiveness, through the increase of internal know-how and of the capabilities of its Employees (Corporate Governance & Sustainability Report, 2011). A training program was implemented geared towards leadership development which involves both managers and leaders and is based on the company's strategic planning debating current and future scenarios of society and the aviation sector that affect the company’s growth. TAP Group has also focused on policies that promote international mobility, which allows employees to have a wide range of global experience, a fundamental piece for professional development within any international company. It is an organizational tool that encourages its members through challenges, preparing them for greater flexibility, while at the same time testing and observing their adaptation capabilities. The company also has several other programs all aimed at the development and professional growth of its workforce by getting the employees involved and giving them a voice and image of the company. By doing so, TAP continues its relationship with those that make a difference and with those who work and shape TAP's personality on a daily basis. Along with promoting employee growth, the company provides exceptional health, well-being and safety perks.
TAP Group being focused on health, well-being and safety, established the TAP campus located near the Lisbon Airport, its main hub. The campus provides an array of benefits to its employees and their family members. UCS-Unidade de Cuidados de Saúde is a health-care service provided at the campus and offers out-patient health-care services to include the Aviation Medical Certification. It also, with a view to promote a healthier lifestyle, houses a health club that is made available to not only current employees but also retired ones and their respective family members. Another recruitment strategy came to light in Oct 2011 when TAP launched its first advertising campaign, TAP Cast. It focused on the safety of the airline and how each member is responsible for it. This not only attracted potential employees but also played a role in bringing in more customers. It was such a success that it brought in over 700 registrations for employment. TAP encourages employees to be proud of where they work and communicate its promise and services to its customers through the “With Arms Wide Open” company slogan. There were not a lot of labor disputes found or the use of local labor markets, other than the TAP cast advertisement. The biggest issues the company faced and continues to face is the potential pilot and ground crew strikes, the latest being held June 2013. There seems to be a power struggle among the company and labor union for these positions but nothing that other companies have not encountered. Overall, the company’s human resource management team continues to improve its employee’s professional and personal lives through programs and systems keeping them ahead of its competitors and earning several awards throughout the years.
Section V Organizational Structure TAP changed dramatically in the 12 years starting in 2001 when it changed its organizational culture, strategy and focus. The five main areas of change were: income increase, costs reduction, increases in quality of service, change in procedures and improvement of the organizations and development of human resources. It all started in 2000 when a new administration arrived at the firm and changed the company’s mission and organizational structure that many doubted would actual work. By 2009, customer and employee satisfaction became the focus and TAP had made the list of best company to work in Portugal proving its successful change. This was possible because the administration used the top-down approach in the culture change, as an example, instead of telling the firm what to do and how to do it, they got with all the departments and challenged them to analyze and see how they could reduce cost. This places ownership on the employees verses the administration hence promoting innovation with each division. As cost-reduction ideas were identified and shared by all employees, immediate supervisors gather them and elevated up the chain of command and, if implemented, save the company millions in euros. In the past 13 years of the company’s first real change, stakeholders, to include public opinion, began to shift and started to recognize that the change, they originally doubted, is for the better of the airline.
TAP Portugal has recently reached out to Discover the World Marketing furthering its international footprint in todays global economic airline industry. Frank Zehle, TAP Portugal’s general manager for Germany and Austria, said;
On May 27 (2011), we will inaugurate nonstop service between Vienna and Lisbon. We needed to partner with a company that had the marketing knowledge, understood the local culture and had proven results with other clients. Discover the World Marketing fit that bill.
Discover the World Marketing is a leader in global travel distribution with over 85 offices in 60 plus countries. 67 firms utilize its sales, marketing and business process outsourcing services keeping it as a dominant innovator Social media is a crucial part of today’s international business model for the travel industry (Discover the World Marketing, n.d.). Along with teaming up with Discover the World Marketing Company, TAP has also dove into the social media world.
According to Viera Vaz, TAP’s innovation process is based on internal and external collaboration. Internally, it challenges its employees to join a cost reduction program that relies on their knowledge by suggesting changes to processes aiming at cost reduction. Externally, the company uses its “internal knowledge” instead of using outside consultants.
The world is facing a growing interest towards social networks and interactions inside and outside of organizational boundaries, which can represent an opportunity for the firms (Viera Vaz, 2013). Organizations are quickly realizing that by merging the classic business process management (BPM) approach with social software, they can achieve a competitive advantage. This social BPM, according to Brambilla (2012), has a main purpose to enhance organizational performance through a controlled participation of stakeholders in order to process design and execution. TAP Portugal uses this fairly new way of social networks, Facebook, Twitter, LinkedIn, and YouTube to name a few, changing its business process, organizational culture and fostering trust with its stakeholders. It uses these avenues to market their product throughout Europe and the world. TAP launched its new image and designation as TAP Portugal in 2005. Later, in 2009, the company’s marketing department created Facebook and Twitter profiles and in 2010, an official YouTube channel was completed making it the first company in the tourism sector to have one. Facebook, being the most popular, is now managed by Vice President, Luis Mor, and includes three separate departments, promotions and entertainment, crisis management and institutional communications and customer service. Facebook has become TAP’s main project because it synthesizes a series of principles that the company has to observe in order to compete in such a demanding market (Viera Vaz, 2013). It also places some pressure on the company since it now deals with its customers on a different level. Social media, especially Facebook, allows TAP to better monitor customers’ concerns, complaints, and compliments, which, in turn, serves them better. Thus, it’s a process that the entire organization understands and is a part of. They learned that social media, especially FB, is a means of communication between customers and the company and changed the vision they had for FB. It was originally thought of and used as a marketing platform to promote products and services but quickly changed with a one major event in 2010. The Eyjafjallajokull volcano erupted and, because of its ashes, airspace was closed in North America and Europe. Millions of passengers were stranded and delayed at European airports which caused chaos, flooding the airline contact centers and counters. With the enormous amount of calls, desperate travelers turned to FB for questions to TAP, which in turn made the company realize the importance and ability they had with social media.
Section VI Culture and Ethics
The company’s culture is one to be admired. Leaders and managers alike recognize the importance of its employees and ensures they all have a say in the company. The Company has defined, as one of its critical success factors, compliance with its Code of Ethics and commitment to a culture of values upheld by this code. This is evident by the programs TAP offers to its employees, customers, stakeholders and suppliers throughout the world. The company’s Code of Ethics was adjusted in 2011 to a very significant reality, in terms of internal and external relations, represented by the use of the Internet and social networks by the Group's employees (TAP, 2013). Furthermore, in compliance with the principles laid down in the Code of Ethics, the Company started to encourage the employees and community of social and environmental values, the reconciliation of family and work, and respect for the rules governing good commercial practices, as well as relations with shareholders and stakeholders (Code of Ethics, 2011). It manages culture and ethics through programs and initiatives keeping in mind not only the customer but also the environment. It continues to renew its fleet with state-of-the-art technology and more eco-friendly engines ensuring the safety and peace of mind to its customers. The organization is also aware its environmental responsibilities and takes part of TAP’s green initiatives program that consists of reducing emissions per passenger transported and committed to sustainable development by adhering to the principles of the UN Global Compact (tapportugal, 2013). Additionally, the company manages an environmental management program that involves three treatment plants. These plants transform effluents in water back to nature without any aggressive action (tapme.pt, n.d.).
Section VII Global Operations
TAP joined the Star Alliance Group in 2005, which is the biggest alliance currently in operations. Established in 1997, it consists of 28 member airlines with over 4.7 thousand aircraft servicing 727 million passengers per year (staralliance, n.d.). An alliance takes advantage of its member’s synergies to expand the operating network to a planetary dimension (Pereira, 2011). Its members, in turn, receive the benefit of a wider area for their operations bringing in more passengers and clients. It also saves the company money by using common resources and, with much less effort, captures more clients then they would have if operating alone. According to Fernando Pinto, CEO of TAP Portugal, being a member of the alliance benefited the company by increasing business demands in Germany and the USA. TAP, in 2007, acquired Portugalia, a smaller Portuguese carrier, furthering its growth within Europe. Pinto stated “Portugalia will not add capacity directly because it will remain independent, but it will feed our system, which will allow us to add capacity and airplanes” (Sobie, 2007). Portugalia, being a regional airline, operates to around 20 European cities and had a code-share with Air France until April 2007. It is now TAP’s regional carrier extending the company’s footprint throughout Europe. TAP has also codeshares with several other partner airlines creating an even larger range of cities beyond its own system-wide network of 77 domestic and international destinations in 35 countries, as of 2011 (star alliance, n.d.). Along with passenger service, TAP is constantly investing in innovation and in the use of new technologies in order to offer high quality, safe and reliable products and services. It offers the only direct European link to the Portuguese territory Mozambique, and is the second largest carrier operating between Europe and Angola, with 15.5% capacity share after TAAG Angola Airlines (Clark, 2013).
Travelport, the business services provider to the global travel industry, and TAP joined forces and are committed to work together on a number of joint strategic initiatives such as group bookings and merchandising (travelport, 2012). “Our full content agreement with Travelport is an important part of our distribution strategy to ensure our flights are available to the largest possible audience across the globe”, said Carlos Paneiro, Vice President Sales, TAP Portugal (travelport, 2012). Robin Ranken, Head of Airline Relationships for Europe, said:
Signing this agreement is great news for Travelport, TAP and our mutual customers. Our agreement secures full content from one of the key airlines in Europe, and a valued partner of Travelport. Having all worldwide TAP fares and content also allows us to continue to maximise our distribution scope in important Travelport and TAP countries such as Brazil, one of the world’s emerging economies.
Section VIII E-Commerce
TAP Portugal encourages and breeds innovation in the workplace. Some examples were already identified previously in this report, however, there are a few more that has really placed the company in a more desirable place. The department recently implemented a new cargo management system, CHAMPS Cargosystem. The aim was to go fully automated in commercial operations and accounting processes throughout the company’s international network. CHAMPS eCargo system includes an integrated solution of Cargospot Airline, Cargospot Handling, and Cargospot Revenue enabling TAP a paperless information exchange with the forwarding community as well as customs offices and other partners (CHAMP, 2013). Vice President of TAP cargo, Jose Anjos said “We decided on CHAMP as single source provider for our new cargo system to ensure high interoperability of the different solutions” (CHAMP, 2013). By doing so, the company can now merge digital and physical transactions and take advantage of conducting business electronically, instantly and more efficiently. It’s a win-win situation for both TAP and CHAMPS. Another application the company uses is the Apple and Android app world. In keeping with its ongoing commitment to technological innovation and greater convenience for its passengers, TAP launched a new version of its site for mobile devices (flytap, 2013). This new site features flight booking, check-in, departures and arrivals as well as many other flight management tools all in a mobile device. This allows passengers the mobility to go about their day and still be able to plan their flight. In 2008, TAP selected and enhanced ITA software Inc’s QRX program to manage their airfare and shopping prices. ITA is a leading provider of innovation solutions to the airline industry (ITA software, 2008). Through its use QPX, TAP Portugal is able to deliver an improved customer experience, greater transparency and more flight options to its ever-growing number of online customers (ITA software, 2008).

Section VIX Political Environment Portugal, due to its poor economic condition, requested a bailout from the European Union and International Monetary Fund (IMF) in early 2011 and agreed to sell off the government’s assets in exchange for 78 billion euros (Armitstead, 2011). Part of this deal included TAP Portugal, who was and is currently 100% owned by the government. Throughout the last few years, the company had very little interested parties willing to purchase the organization and in late 2012, the only bid, Synergy Aerospace, was rejected by the Portuguese government. This puts yet another delay in the privatization of the airline and causes more quarrelling amongst the nation and its creditors. Pinto, TAP CEO, stated during an interview with CNN “trust in an airline the same way that they trust in the area where we operate, and Europe is very important” (Joy, 2013). He’s referring to the nation’s fragile economic times and the recent incidents that took place in Cyprus. By the end of 2012, the company had earned a net profit of 15.9 million euros due to the increased number of passengers and the 21% reduction of its debt (Joy, 2013). Pinto goes on to say that the company, to include the rest of the European airlines, has been “over-regulated” causing a possible interruption in the economic growth. That coupled with the company’s biggest concern, unemployment, creates an uneasy feeling for those at TAP. Section X Summary The airline business has been an important part of the global economy since its birth in 1903. TAP Portugal, led by CEO, Fernando Pinto, has been among the best in the aviation world. Pinto transformed the local company into a successful international organization through his leadership philosophies. His management style, ideas and innovation changed the way the public initially viewed the carrier and brought the company to a whole new level in today’s social media platform. Additionally, the company’s cultural and ethical awareness kept them moving forward by renewing their aircraft fleet providing more efficient airplanes and being sensitive to the environment with its green initiative programs. Furthermore, TAP expanded its services throughout the world by joining the Star Alliance group partnering up with several airlines thus increasing its destination network to 35 countries. Lastly, despite the looming uncertain future of its privatization sale, TAP continued to focus on its customers through innovative thinking resulting in the exploitation of social media, especially Facebook, implementation of its e-cargo service, and new versions of the company’s mobile device programs, just to name a few. TAP Portugal is a leading airline in Europe and one of the better airlines out in the international aviation world.

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