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Burkina Faso: the government again privatizes Air Burkina Burkina Faso: the government again privatizes Air Burkina

Burkina Faso has opened up Air Burkina's capital to the private American group AGD, which will inject $ 452 million. Its business plan includes, among other things, increasing the fleet to 12 aircraft, serving Europe and opening an MRO center. Air Burkina had been partially privatized between 2001 and 2017.

The privatization of Air Burkina will be effective from January 2021. The Burkinabé government has just signed a partnership agreement with the American group African Global Development (AGD). The agreement was initialed in Ouagadougou on October 20 between the Burkinabe Minister of Economy and Finance, Lassané Kabore and Phil Smartt, CEO of the private American group AGD.

Under this agreement which opens the capital of the company, "approximately 250 billion FCFA (452 ​​million dollars) will be injected into the capital of the company, with a view to strengthening its fleet", announces the government.

“After signing the acquisition agreement, the legal process will begin and will last approximately two months. It is at the end of this stage, that new planes will come to reinforce the Air Burkina fleet, which will go from the state company regime to the private company regime, from January 1, 2021 ”, clarifies the group acquiring Air Burkina.

According to sources familiar with the matter, the state and local private companies should retain a minority stake of 20%. Almost unknown to the aviation industry in Africa, AGD is based in Florida, USA, and has offices in Ouagadougou and Accra. The tandem, made up of Phil Smartt and his director of operations Chandler Cosby, boasts a long experience in the financing and design of transport infrastructure projects (rail, airport, freight management, etc.) issued in the form of an agreement. concession or BOT (Built, Operate and Transfer).

AGD intends to densify the company's fleet with a dozen planes, including four Airbus A220-300s, three Embraer E145s and three Cessna Grand Caravans. According to the schedule, the first A220-300 could be put into service by the first quarter of 2021. The Minister in charge of Transport, Vincent Dabilgou, does not also exclude ATR devices for sub-regional services. Air Burkina currently operates three Embraer aircraft (two E195 and one E175) with monthly rental fees of approximately $ 535,000.

With this reinforced and adapted fleet, the American group is committed to serving the regional capitals of Burkina Faso, to extending the African network and in the medium term to open up to Europe. "The geographical position of our country is interesting for them [the buyers], because it is a potential that they want to develop", affirms Minister Dabilgou.

"The other part of the agreement concerns the construction in Burkina Faso of a maintenance center and an aeronautical academy for the training of pilots and aircraft mechanics," said the finance ministry.
 
Air Burkina is not its first experience of opening up capital to private investors. It had been partially privatized in 2001. At that time, the state had transferred 56% of its shares to the Ishmaelite Aga Khan Fund for Economic Development (AKFED). However, the deteriorating financial position of the company forced the private investor to pull out. Air Burkina loses annually between 3 and 3.7 billion FCFA (5.4 and 6.6 million dollars).

In May 2017, the Fund sold its shares, at the symbolic franc, to the Burkinabè state. According to Mahmoud Rajan, AKFED's representative, this was a strategic and voluntary choice of the group, which wanted to reorient its activities towards other sectors.

Air Burkina remains one of the oldest airlines still operating in Africa. Founded in 1967, it has lost its market share over the years, mainly due to stiff competition with the arrival of new regional competitors. Last year, its corporate performance chart posted sales of nearly 24 billion FCFA ($ 43 million) for 185,500 passengers carried.

For 2020, the company expected a turnover of 26.7 billion FCFA (48 million dollars). A goal now unrealizable due to the Covid-19 pandemic which led to the suspension of its activities between the end of March and July, worsening in the process its debt estimated at 23 million dollars
Source: newsaero