Air Afrique hopes to overcome its worst crisis yet by privatising and forming a strategic partnership, but critics say the airline's chairman has mismanaged and should resign.
The heavily indebted Côte d'Ivoire-based carrier, owned by 11 African states and Air France, has defaulted on payments for four Airbus A310-300s and in July the fleet was returned to creditors. The airline claims to have maintained 95 per cent of services with temporary leases of three more aircraft and higher load factors and utilisation rates.
Creditors Crédit Lyonnais, Dresdner Bank and Midland Bank are now looking for a buyer for the aircraft and Air Afrique will have to pay any shortfall. The airline had hoped to finance the aircraft through a special fund, but five of the 11 African owner states failed to make their CFA1 billion (US$1.7 million) contribution to it. Payments on the remainder of the carrier's total CFA180 billion debt, owed to African and European financial institutions, are 'up to date', says chairman Sir Harry Tirvengadum.
Last year an unfavourable dollar exchange rate and a nine-month cessation of services to Brazzaville due to Congo's civil war cost the airline CFA13 billion .
Air Afrique lost CFA6.6 billion in 1997 on a turnover of CFA267 billion, although this is a positive movement - in 1996 losses were CFA23.3 billion. Tirvengadum is guardedly optimistic, pointing out that the company made a CFA1.2 billion profit in the first quarter of 1998, and expects a CFA4 billion full year result.
The company is also looking for a strategic partner and talks with Air France are 'fairly advanced', says Tirvengadum. This 'may' involve Air France increasing its equity stake from the current 10 per cent. Air France would not confirm this but Raphael Bijr of Paris-based consultants International Consortium Group says Tirvengadum must go.
Since taking over from Roland-Billecart, Tirvengadum has failed to tackle the company's severe cash flow problem, or cut unprofitable routes, says Bijr, adding: 'This guy was rather efficient at Air Mauritius but he is not able to do the same at Air Afrique. If he hasn't been able to turn the company round in 18 months it's time for somebody else to take the driving seat.'
Source: Airline Business
