The chief executive of Portuguese national airline TAP on how he’s seen the flag-carrier through turbulent times – and why workaholics are not to be trusted.
Brazilian-born Fernando Pinto has flying in his blood. His father piloted planes ranging from gliders to 747s and Pinto grew up surrounded by the glamour that typified the industry in the 1950s. He started flying light aircraft at 16, managed a small flying club in his teens, built a hovercraft as a university project and has worked in the industry ever since.
Since 2000 he has been chief executive of Portuguese airline TAP, leading it through a long process of privatisation that completed last year. He arrived in Lisbon from Brazilian airline Varig, which he joined as an engineer in 1972, working his way up to chief executive by 1996. At the time Varig had 24,000 employees and 120 planes “but it was burning cash and had very low margins”, says Pinto. His task was to build a strong senior-management team and to improve profitability. “By the time we left it had record-breaking margins of about 17 per cent.”
Pinto uses the word “we” a lot, referring to his team; he is clearly an inclusive manager. “The senior-management team here have formal meetings every month but informally we meet twice a week and we have lunch together every day. It’s important to talk, get feedback and exchange ideas.”
You sense too that he enjoys arriving in the midst of a corporate storm and sorting things out. “When I started at TAP it was in a privatisation process that fell through. We only had three months of cash left but we were able to raise €40m.” This saved the airline from disaster.
Even when talking about significant challenges, Pinto’s voice and demeanour are measured and unperturbed. Perhaps it’s due to the almost 45 years he’s spent in the industry; he’s seen it all, good and bad. But it’s also down to a management philosophy. “As the senior person it’s important that you are calm,” he says. “You have to be the guy who helps solve problems; you don’t want to be the problem.”
Unlike some managers, who judge commitment by the number of hours spent at a desk, Pinto believes that finding time for life outside of work is key. “The job can be very demanding so at the end of the day I try to switch off. I ride my bike after work and I have hobbies. I don’t trust managers who are workaholics.”
After a challenging start at TAP in the early 2000s, Pinto guided the airline through more than a decade of growth but the past few years have tested his mettle once again. In 2014, on the back of industrial action around the privatisation process and falling demand in the Brazilian market, the airline posted a loss of more than €80m. Brazil, which comprised 25 per cent of its income pre-2014, has seen a 40 per cent drop in sales due to the country’s economic and political struggles.
Last year was also tough. Falling oil prices have been a double-edged sword for TAP, which has significant markets in Angola and Venezuela, two countries whose wealth has been impacted by declining oil revenue. In 2015 TAP announced a considerable loss for the second year running on the back of a €91m write-off against Venezuelan ticket sales, whose revenues have been retained in the country due to its fiscal crisis. “The past two years were bad but in 2015, without the write-off, we were almost breaking even and I think we’ll see profitability in 2016,” says Pinto.
The road to recovery started with the successful privatisation of the airline in 2015, which saw TAP acquired by Brazilian-Portuguese joint venture Atlantic Gateway. The airline’s new owners are injecting capital into the business and Pinto is taking the opportunity to build up both the fleet and the route network. He has started upgrading the fleet: 53 new aircraft have been ordered, including several single-aisle, long-range Airbus a321s. “These are very important given our geographic position,” says Pinto. “They allow us to really open up the US market.” Daily flights to New York and Boston launched in June and new US destinations are planned. Meanwhile, the regional fleet is being upgraded and has been rebranded as TAP Express.
Other investors are interested in the carrier. Chinese conglomerate HNA, owner of Hainan Airlines, has recently acquired a 7 per cent stake in Atlantic Gateway, meaning it might acquire a further stake in TAP through future share issues. Pinto says HNA will be represented on the board of directors. “It’s positive as it strengthens our connection to the Asian market but we don’t plan to have direct connections to the Far East in the near future. Our priority is to strengthen the destination network to the US; of course Brazil, Africa and Europe remain important too.”
Pinto is remarkably open and says he believes communication is key, a trait that he learnt from his father, whom he cites as a key influence not just in his career choice but also in his management style. “It’s about management with justice. You need to be able to explain why you’re making decisions; I learnt this from him.”
Size of fleet: 80
Aircraft in fleet: 63 Airbuses; 17 ATR 72s and Embraer 190s
Flights from Lisbon: 300 per day
Newest route: New York, JFK
Next route: Bissau, Guinea-Bissau(December)
1945 Airline launches
2000 Pinto joins as CEO, during which time the privatisation plan falls through
2000 to 2009 Airline experiences its fastest growth and returns to profitability
2015 Privatisation completes and Atlantic Gateway (joint venture between Brazilian firm Azul Linhas Aéreas and Portuguese road-transport magnate Humberto Pedrosa) takes 61 per cent shareholding
2016 Atlantic Gateway agrees that the newly elected Portuguese government’s share of the airline should go up to 50 per cent. Chinese conglomerate HNA buys a stake in Azul Linhas Aéreas, giving it a seat on TAP’s board
What time do you like to be at your desk?
Usually about 09.00.
What is the best way to prepare for leadership: an MBA school or on the job?
An MBA. It gives you the basis for a more scientific approach to management; I recommend it to everybody.
What’s your management style?
I like to work as part of a team. I have an open-door policy and receive people from every level of the organisation.
Are tough decisions best taken by one person?
When there’s no agreement, you have to have the last word and make a decision but generally it’s better to discuss things as a group.
Do you want to be liked or respected?
Both are important but essentially you have to be liked. If you’re not liked you won’t get things done.
What does your support team look like?
I have a personal assistant; I don’t really need a big support team.
What technology do you carry on a trip?
My mobile phone; it’s impossible to do without it. In the 1970s I dreamt of having an object like this to keep me connected.
Do you read management books?
Not really. There is one author, Nawal K Taneja who writes for the airline business and I think his books are very good but generally I prefer to read novels.
Run in the morning? Wine with lunch? Socialise with your team after work?
The senior-management team has lunch together every day. I think it’s a great way to understand what’s going on and to exchange ideas in an informal way.
What would your key management advice be?
To cultivate a life outside work. You need to find time to relax so that you can come back the next day calm and ready for more.