Portugal's TAP airline faces cuts if privatisation fails - PM

LISBON, May 6 (Reuters) - Portugal's indebted flag carrier TAP will have to reduce routes and cut staff if an ongoing 10-day strike by pilots derails the planned privatisation of the airline, Prime Minister Pedro Passos Coelho said on Wednesday.

Pilots at the airline started the strike on May 1, which TAP says has reduced scheduled flights by about 30 percent.

The strike comes just before a May 15 deadline for bids to buy a majority stake in what is now a wholly state-owned company. The government has said it will go ahead with the privatisation despite the strike.

"If the privatisation does not succeed, today we know what the alternative is: a restructuring which can only be based on big lay-offs, route reductions, reduction of equipment and thereby a reduction of the operation and significance of the company," Passos Coelho told parliament.

"That is, transforming TAP into a mini TAP, which is not in the interests of workers, the economy nor the Portuguese," he said.

Because of European Union state-aid rules, the government cannot inject capital into the airline, which has debts of around 1 billion euros.

TAP has estimated that the pilots strike could cost 70 million euros.

The pilots say the government has reneged on a 1999 deal meant to give them a stake in the airline in the event of a privatisation. They also want higher pay for long-serving pilots. (Reporting By Sergio Goncalves; Writing by Axel Bugge; Editing by Tom Heneghan)

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