The government of the Azores said in a statement that it “decided to give the SATA group board of directors orientations in order to cancel the present tendering process for the privatisation of 49% of Azores Airlines’ social capital and prepare the launch of a new competition with the same objective.”

This came after broadcaster RTP/Azores cited confidential documents indicating that there was no formal proposal presented by Icelandair, the only qualified entity to go ahead to the second phase.

The group last year suffered the largest loss of its history, at €41 million - almost three times larger than the 2016 loss, of €14 million.

Its restructuring plan includes an operational overhaul of SATA Air Açores and SATA Airlines.

Loftleiðir Icelandic, part of Iceland's Icelandair group, in July submitted a non-binding proposal to buy 49% of SATA group's shares, but no final decisions have yet been taken in this process, the group's chief executive, António Luís Gusmão, said on 13 September.