The rescue of Air Austral — a French airline based in the Indian Ocean territory of Réunion — takes a different turn as it. submitted a restructuring plan, including a fresh cash injection of 55 million euros ($54 million), to the European Commission for approval.
The airline had previously sought for a merger with Corsair – also in great financial difficulty after the health crisis – which was strongly defended by the French government but fiercely rejected by the elected representatives of the Reunion regional council.
“Our restructuring plan has just been notified to the European Commission by the Interministerial Committee for Industrial Restructuring (CIRI),” Joseph Brema, CEO of the struggling Reunionese airline, announced on Friday in a letter to his collaborators. Agence France-Presse obtained a copy of the letter.
Air Austral lost three quarters of its customers in 2020-2021. At the end of 2021, its debt reached 161 million euros, in addition to 55 million lent by its shareholders, a total greater than its annual turnover at the time.
The State, for its part, guaranteed several loans and granted rescue aid. Public aid has received the green light from the European Commission, provided that the Reunion airline restructures.
Air Austral, which employed 848 people at the end of 2021, is currently 99% owned by a semi-public company, Sematra, bringing together, in particular the Réunion region (73.5%), Caisse des dépôts (13.6%), and the department (11.4%).
A Clear Set of Goals
According to Joseph Brema, who took office in June, the plan sent to Brussels on Sept. 16 is comprised of three parts: A commitment by Reunionese investors to contribute 55 million euros to the capital; a debt restructuring project, which is discussed with creditors and still needs to be approved by a commercial court and a commercial strategy.
“I remain, like our current reference shareholder Sematra, optimistic about the follow-up that will be given,” said Joseph Brema, saying he hoped “a rendering of the decision [in] the current [of] the first half of October.”
This intervention by Reunionese investors now rules out the possibility of a merger between Air Austral and its competitor Corsair, qualified at the end of 2021 as a possible ‘option’ by the Minister of Public Accounts at the time, Olivier Dussopt.
Air Austral serves several destinations in the Indian Ocean and mainland France from Reunion and operates ten aircraft: three Boeing 777s, two Boeing 787s for long-haul flights, three Airbus A220s for medium- and long-haul routes, and two Boeing 737s for medium-haul destinations.
Brussels must now examine the file and validate it, amend it or reject it by mid-October, ensuring that it complies with the public aid system. The restructuring file of the company and its debt retains the takeover of the company by a dozen private shareholders from Réunion.