Cabo Verde Airlines Resumes Operations
According to Erlendur Svavarsson, Chairman and Executive Director of Cabo Verde Airlines (VR), the company is working to resume flights on July 1, 2020.
The airlines, led by Icelandic investors after privatization in 2019, has been completely shut down since March 19 when the Cape Verdean government suspended all international links to contain the COVID-19 pandemic, having only conducted a few repatriation flights.
Cabo Verde Airlines’ July-August Routes
In addition to the initial twice-weekly flight to France, the company’s executive director guarantees that other main routes for the initial period from July to August will be Lisbon, with four flights per week, and Boston with two flights per week. The carrier also plans to resume flights to Milan once a week, to Fortaleza twice per week, Recife once per week, and Dakar three flights per week.
However, Svavarsson warns, all these routes “are subject to government approvals at origin and destination” and the frequency of flights “will also be subject to demand.”
Svavarsson did clarify that the VR “has not received any confirmation from the Government of Cape Verde as to when international flights will be allowed again,” adding that the company “is also waiting for some important markets to officially announce the opening of their borders for international flights. All the internal operational preparations are made for the upturn on July 1,” said the director.
Financial Position
In March 2019, the State of Cape Verde sold 51% of the then state-owned TACV (Transportes Aereos de Cabo Verde) for €1.3m to Loftleidir Cabo Verde, a company 70% owned by Loftleidir Icelandic EHF (which took 36% of VR), and 30% by Icelandic entrepreneurs with experience in the aviation sector, taking over the remaining 15% of the 51% share privatized.
Another 10% was sold in 2019 to Cape Verdean workers and emigrants.
In addition to the total cessation of activity due to the pandemic, the airline has been seeking financing for its operations since 2019, which has yet to close, as Erlendur Svavarsson admitted, “The airline’s long-term financing is still subject to discussions among the main shareholders.” The Cape Verdean Deputy Prime Minister stated on June 14 that nationalization of VR “is out of the plans” of the government, despite “all the interest in maintaining” the airline.
Olavo Correia, who is also Finance Minister, warned that “the scenario is severe for VR as well as for any airline;” hence, the State, as a shareholder of the company (39%), “will have to work with the strategic partner (Lofleidir Cape Verde) to reposition it for the post-pandemic scenario.”
Mutual interests in having a hub for the airline
“The Government of Cape Verde has every interest in maintaining the VR. However, it must be clarified that the nationalization of the company is outside the executive’s plans,” Correla assured.
Exports guaranteed by VR – privatized in March last year with the sale of 51% of the share capital to Icelandic investors led by Icelandair – grew by 37% in 2019, leading the company’s business to be worth almost 8% of Cape Verde’s Gross Domestic Product (GDP).
Olavo Correia added that the company “will have to revisit the business plan,” but “certainly, the government is also revising the concept of a ‘hub’,” which was being installed on the island of Sal to serve flights from Africa, Europe, and America, taking into account this new reality. Cape Verde has a prevalent tourism business that is playing an important role in the country’s economy, the country needs an airline that allows it to connect with the world, the deputy prime minister said. Cabo Verde transported almost 345,000 passengers in the first year after the privatisation of 51% of the company, an increase of 136% compared to the previous period according to the carrier.
