Air Seychelles (HM) has come to an agreement with key stakeholders to pay only one-third of its debt as it seeks to restructure its debt and emerge from bankruptcy under the government stewardship.
State-owned Seychelles News Agency, quoted the airline’s administrators, saying the flag carrier will pay US$27.8 million out of its US$76 million initial debt owed to bondholders as part of an agreement between the airline’s administrators and its creditors.
Bernard Pool, an appointed administrator, said in a statement talks between the administrators, Air Seychelles and the government will continue, to ensure the conditions set within the rescue plan are fully met.
Other reports, quoting the administrator, say the airline will need to sell some assets to pay off the remaining debt.
The government will forgive the debt that Air Seychelles owes the government as part of its restructuring, transport minister Antony Derjacques has told local media.
The airline’s ground handling, cargo, engineering and other services will continue and be improved, while regional flights will have to be restructured, he says.
As previously reported, Air Seychelles faces significant challenges arising from the COVID-19 pandemic and its impact on international travel and tourism.
The financial difficulties arose mainly due to significant debt that was incurred while under the stewardship of Etihad Airways, which was previously a 40% shareholder.
The Seychelles government later bought Etihad’s shares at a discount, making it the sole shareholder.
Under the Insolvency Act, the airline went into administration and two administrators were appointed in October last year to come up with optimum ways of restructuring the company and settling its debts.
Air Seychelles serves international and domestic routes using two Airbus A320neo aircraft and five Viking Air Series 400 Twin Otters.