A €86 million loan for Air Austral

Air Austral has obtained a €86 million loan from government and shareholders to face the Covid-19 crisis, and resume its operations. Anuradha Deenapanray and Vincent Chappard report.

The COVID-19 pandemic has had a significant impact on aviation industry globally due to lockdowns, travel restrictions as well as slump in demand among travelers. Significant reductions in passenger numbers has resulted in planes flying empty between airports or grounded, and flight cancellations.

The crisis has hit the countries of the Indian Ocean severely. Airlines have had to take drastic measures, ensuring only cargo flights and stranded travelers assistance. Economic and industrial activities have been substantially affected as these insular countries depend on tourism and foreign imports.

This critical context continues to weigh on travel demand and transport supply.

In Reunion Island, Air Austral has reduced almost 95% of its activity compared to its initial programme (April and May). The airline has implemented important measures to protect its passengers and staff, and also to safeguard its financial capacity and operational facilities.

Air Austral has maintained its services and routes between Reunion Island, Mayotte and Paris. The airline has negotiated with governments to postpone tax payments, social security contributions and various charges. It has implemented partial unemployment measures for almost all of its 950 employees.

In parallel, Air Austral has started negotiations with its banking partners with the full support of the French government, its major shareholder (Sematra) and other partners for the setting up of a financial plan to face the Covid-19 crisis. Air Austral has just obtained a loan of 86 million euros which is a vital to help the airline support its activities until July. The high season still looks gloomy as the virus is still circulating and tourists coming from Europe are not travelling far this summer. Activities are expected to get back to normal progressively by the end of 2020.

“I would like to thank our major shareholder SEMATRA, the Reunion Regional Council, for its trust in Air Austral's ability to meet this challenge and succeed. I also thank the French government and our banking partners for their important contribution. It will help Air Austral to face this unparalleled crisis and pursue its activity, backed by determined and mobilised teams. However, this changing context demands our extreme vigilance”, says Marie Joseph Malé, Chairman and CEO of Air Austral.

Air Austral has proved an immense sense of solidarity and social responsibility which bears testimony of its role as a territorial anchor and link.

Air Austral is unflinchingly mobilising all its efforts to continue playing its role as an important contributor to Reunion Island’s economy. The airline continues to operate all-cargo flights from Paris with one of its Boeing 777-300ER. It has also been involved in the repatriation of hundreds of travellers stranded in Morocco, South Africa, Madagascar or Mauritius.

Air Austral has also maintained air connectivity with a reduced flight schedule operating two weekly flights to Paris and an air bridge between Reunion Island and Mayotte. Since beginning of May, the airline has been distributing masks to passengers. It has also set up a specific cabin-cleaning programme before each flight. Crew members are adequately equipped and on-board service has been reorganised.

IATA, ACI, ICAO and industry partners have been working closely to define coherent and harmonised measures to face this unprecedented global crisis.

IATA director general, Alexandre de Juniac says that “our top priority is to re-start this industry safely. We are proposing a series of measures that we believe will give governments the confidence to re-open their borders. It is a risk-based layered approach to biosecurity that needs to be coordinated globally”.

In the meantime, airlines and airports in the Indian Ocean region show much concern about the post-Covid-19 crisis, as recovery in traffic and renewed confidence will take time as uncertainty and the dramatic economic outlook persist.