It’s a long soap opera that will end in the coming weeks: the takeover of Air Austral. Apart from changing the situation, it is the local solution brought by a consortium of Reunionese investors as well as the local authorities that will prevail. According to our information, the company confirmed, the project was finally validated by Bercy in August and is about to be announced by the European Commission. If it is confirmed by Brussels, it will certainly sound the death knell for the marriage project between Air Austral and Corsair, which has long been pushed by the State but refused by the Reunion region, owner of Air Austral through a semi-public company of Sematra. All hopes of cooperation between the two companies have not been buried yet.
So the local recovery project is now in its final phase. After some time of building with, the first, a first version rejected, he obtained the approval of the Interdepartmental Committee for Industrial Restructuring (CIRI, State service that manages this file, such as the help of the airlines). Only denial from Brussels seems capable of derailing it.
55 million on the table, the region returned to the pot
The file revolves around a firm offer of 55 million euros. Of this total, 30 million euros will be contributed by the consortium of Reunion Island investors gathered around Michel Deleflie, CEO of the Clinifutur group. He will thus become the majority shareholder with 55% of the capital of Air Austral.
Due to the need for the company to have an adequate recapitalization, Sematra will also return to the pot with a valid contribution of 25 million euros. It consists of a contribution from the region of Reunion for 15 million euros, the department of Reunion for 5 million euros and the Chamber of Commerce and Industry of Reunion (CCIR) also for 5 million euros.
In return, the State can write off part of Air Austral’s debt of 220 million euros. According to a connoisseur of the file, it may rise to 75 or 80% of this total. The company indicated for its part that these data are confidential at this stage, but confirmed that a debt modification was negotiated under the aegis of CIRI. According to its terms, an acceptable agreement was reached between Sematra, the consortium of investors and creditors.
The result is expected in early October
The announcement by the European Commission should take place in the coming days. It should study the various elements of the file such as the long-term credibility of the recovery plan, the amount contributed by the investors, the cancellation of the State debt, the balance between these two amounts…
According to the details of Air Austral, Brussels has regulations between 20 days and two months to make its decision. The company hopes for it in the first half of October. For their part, the investors from Reunion set a deadline of September 30, but according to a union delegate, there is little chance of withdrawing the offer if it is exceeded.
Future demanding shareholders
In addition to this schedule, the consortium has set other requirements. One of them is related to the efforts that will be made by the personnel of Air Austral to reduce the salary between 16 and 17% of the turnover, which corresponds to a low company. An effort that is considered very great by an employee representative, who remembers that a collective customary rest and a collective performance agreement have already been signed to deal with the Covid crisis.
For its part, the company indicated that due to the measures taken during the crisis, it must first assess the needs of replacing workers and make the necessary balance. Depending on the sources, this payroll/turnover ratio currently varies between 18% – which would put Air Austral at a competitive level – and 24%. Before the crisis, in 2018, it was around 21%.
Discussions have been initiated by staff representatives and, it seems, it has become possible to weigh this requirement. The unions argue that the increase in productivity and therefore in turnover is possible to reduce this ratio. Discussions are ongoing and various levers are being identified.
Another requirement given to future investors is to launch a fleet renewal reflection. A good connoisseur of the company considers that it is not very strict, the work has been done according to the habits of the company that changes the air fleet every 7 or 8 years. The planes should be replaced around 2024, but this goal has been postponed to 2026 due to the health crisis.
All these topics in any case should be discussed with the next management team of Air Austral, appointed by the future shareholders, whoever they are. Since the departure of its CEO Marie-Joseph Malé in June, after ten years at the helm of the company, it is now managed on an interim basis by Joseph Brema, until then finance director. In the words of Marie-Joseph Malé, this transition period should allow the arrival of the future management team.