The European Commission has decided that Air Austral can be restructured. Brussels recently approved 119.3 million euros in restructuring aid from the French state in favor of the Reunionese airline. Accompanied by A “Compensation for damage caused by the coronavirus pandemic” 17.5 million euros. This decision will enable the acquisition of Air Austral by a consortium of Reunion Island investors, backed by a recapitalization by local government authorities.
This request for assistance was announced by France at the end of last summer, and a response is expected in October. It therefore took longer than expected for Brussels to respond, but the outcome was positive for Air Austral. This is the culmination of a long process with the Inter-Ministerial Committee on Industrial Restructuring (CIRI, the government agency responsible for this file as well as helping the airlines). After trying to bring about a rapprochement between Corsair and Air Austral, the latter confirmed the local takeover option as requested by the Reunion region.
The possibility of debt
In fact, this aid of 119 million euros should correspond to a debt waiver, not a cash injection by the French state. Thus, during the collection of the takeover file, Paris had offered to contribute by writing off part of Air Austral’s debt of 220 million euros. The company informed about this in September Gallery that an acceptable debt restructuring agreement has been reached between Sematra, a consortium of investors and creditors negotiated under the auspices of CIRI.
An expert on the file estimated that the French state could receive 75 or 80% of this total. A few months later, the share is significantly lower, about 54%. If Brussels has confirmed the validity of the restructuring plan, it may have decided that such a debt cancellation is too important compared to the contribution of private investors.
The Commission also notes in its press release that: “Furthermore, the public financing of the restructuring plan meets the proportionality criterion, the beneficiary participates in its financing through its own or private financing, which allows the company to return to its operational capacity. long-term and has only a minor impact on trade between Member States. »
A recovery on the way
Along with debt cancellation, the company’s restructuring includes a cash injection of 55 million euros. This amount includes a €30 million takeover bid by a consortium of Reunionese investors gathered around Clinifutur group CEO Michel Delefli. Thus, it will become the majority shareholder with 55% of the capital of Air Austral.
The remaining 25 million euros are provided by local public institutions for a substantial recapitalization of the company in dire need. The round table consists of the Réunion region, which currently owns Air Austral through the semi-public company Sematra, which will invest up to 15 million euros, the department of Reunion with 5 million euros and the Chamber of Commerce and Industry of Réunion (CCIR). ) also for 5 million euros. This contribution is not included in 119 million euros, the Commission speaks well of state aid in its press release. When asked, Air Austral also confirms this view.
In return, Brussels still imposes conditions on Air Austral “Limit distortions of competition”And this “for the entire period of the restructuring plan, i.e. from January 2022 to March 2025”. This includes limiting the number of seats offered and the number of airlines operated by the company, prohibiting participation in shares in other companies and opening commercial contracts to airlines that request them.
This last condition may bother Corsair. If the attempt to reconcile with Air Austral fails, the two companies have explored the possibility of a commercial joint venture with significant potential benefits. Put in the boxes, such a project may see the light of day again, but for now it remains hypothetical.
The compensation of €17.5 million should go directly into Air Austral’s coffers. This is provided as compensation by the French state “Travel restrictions imposed to limit the spread of the coronavirus” Between March 17 and June 30, 2020, these forced the company to suspend almost all operations.