Icelandic-owned entity Loftleidir Cabo Verde has launched an ICC claim against Cabo Verde after the African island nation announced plans to re-nationalise its flag carrier Cabo Verde Airlines in the wake of the covid-19 pandemic.
The former strategic equity partner is accusing the state of Cabo Verde for breeches in agreements entered between the parties concerning the airline.
Loftleidir Cabo Verde noted that it sustained heavy losses when the government in July this year unilaterally decided to expropriate, by decree, Loftleidir Cabo Verde’s 51% share capital in Cabo Verde Airlines and unilaterally terminated a March 2021 agreement with its former equity partner for the airline to resume operations, as Reported by CH-Aviation.
“Loftleidir Cabo Verde had already rejected all allegations of breach of contract alleged by the State of Cabo Verde and in order to enforce its rights, it initiated the arbitration proceedings. The International Court of Arbitration is the competent jurisdiction as mutually agreed in contracts between the disputing parties,” the company stated.
On the other hand, the government is accusing Loftleidir Cabo Verde of failing to honour the March 2021 agreement to provide USD30 million for the restart of commercial services, an accusation the company denies.
The state said it has provided loan guarantees of USD14.2 million earmarked for the restart of services and to cover outstanding bank repayments of the airline, in addition to five government loan guarantees totalling USD24.4 million already provided to the airline since November 2020.
Loftleidir Cabo Verde, a 70/30 joint venture between Icelandair and Loftleidir Icelandic bought the majority share from the government in March 2019 with an intention to fully privatise the airline.
The airline hopes to resume commercial ops this December according to the archipelago’s prime minister Ulisses Correia e Silva talking to the parliament recently.
“And if all goes well, as we are predicting, TACV, will start operating during the month of December of this year”, he said.
The government had previously mooted the resumption of operations for March 2022.
Cabo Verde Airlines has been grounded since March 2020 due to COVID-19 travel restrictions.