Air Afrique goes bankrupt
Air Afrique, the pioneering multinational airline launched in 1961, has ceased operations completely after being officially declared bankrupt on 7 February this year. The big question now is whether each member country of Air Afrique may try to establish their own airline to provide essential domestic and external air services. The recent launch of Air Senegal International, a joint venture with Royal Air Maroc, indicates a new trend in this direction.
The bankruptcy action was taken following protracted deliberations by the 11 French-speaking West and Central African states – Benin, Burkina Faso, Central African Republic, Côte d’Ivoire, Congo, Mali, Mauritania, Niger, Senegal, Tchad and Togo – that collectively owned a 68.4% equity stake in the airline.
The African Governments acted in concert with Air France and the other shareholders in Air Afrique. The airline’s total debts were estimated to be around US$445 million and its demise was almost inevitable given the failure of several rescue attempts during the last few years.
The repossession of Air Afrique’s leased Boeing 737-300 and Airbus A330 aircraft by US-based International Lease Finance Corporation (ILFC) sounded the death knell for the airline. By early January this year, Air Afrique’s only aircraft in operation, an Airbus A300-600 leased from Alizee, had to be returned to the lessor to avoid default on the monthly lease rental payments.
The future for Air Afrique looked bleak indeed. It had zero aircraft, over 4,000 staff on its payroll, had run out of cash and had no lines of credit available. In addition, none of its shareholders’ were willing to inject new funds into the carrier, hence the decision to file for bankruptcy.
The recent plan to form a new company called Nouvelle Air Afrique financed primarily by Air France did not take off even though an agreement had been reached on the shareholding arrangements. It was agreed that Air France would have a 35% equity stake in the new airline making it the largest shareholder and the 11 African Governments would see their stake reduced to 20%. However, one of the key stumbling blocks was apparently the request by Air France to have exclusive traffic rights on key intercontinental and African routes for a period of 10 years.