MARK PILLING LONDON
Former TWA and Reno Air chief executive Jeffrey Erickson and consultancy SH&E have been tasked with dragging Air Afrique back from the brink of collapse and re-structuring the debt-laden carrier.
SH&E, which has worked closely with Air Afrique in the past, was appointed in late January by the Transport Minister of Senegal on behalf of the 11 West African former French colonies that have majority ownership in the airline.
The funding for SH&E's involvement is coming from a World Bank technical assistance grant. An Air Afrique board meeting in February gave SH&E a "full mandate to do whatever is necessary to fix the company," says Scott Gibson, SH&E senior vice-president and leader of the company's 15-strong team working on the project. The governments of the 11 countries say they want to restore the airline to profitability and de-politicise its management by distancing themselves from the carrier.
SH&E and Erickson, who was put forward by SH&E and has considerable experience of operating airlines in tough circumstances, face a daunting task. "At present we are basically doing triage," says Gibson. "There is an urgent cash problem and we need to stabilise it."
Air Afrique also has a schedule it cannot fly, he explains. Its published timetable requires 11 aircraft while it only has eight in the fleet and delays and cancellations are commonplace. All loss-making routes were stopped immediately on SH&E being appointed and an interim schedule is being flown with the available aircraft. "Once the company is stabilised we will go out and fix the fleet," says Gibson.
Nobody knows how big Air Afrique's unmanageable debt is, or how much it owes creditors, because its financial systems have not been working since December 1999 as they were not Year-2K compliant. The airline has had no general ledger since then and its revenue accounting system is only about 30%effective, says Gibson. Cash management is also de-centralised, with over 150 bank accounts active in different countries, making "it very difficult to know what the real cash situation of the company is".
Staff numbers have been cut by 430, including the entire management team and department heads. Air Afrique has about 4,200 staff and this number will be trimmed to about 1,800 fairly quickly. SH&E has an aggressive timetable to stabilise the carrier and gear it up for a privatisation in 14-months with a strategic investor being brought in, probably another airline.
Source: Airline Business
