Cabo Verde Government to ink new Agreement with Icelandair on Management of Cabo Verde Airlines
The Government of Cape Verde and Loftleider Icelandic, of the Icelandair Group, is to sign a new agreement next week for the management of the Cape Verdean air carrier (TACV), the Minister of Tourism and Transport Dr. Carlos Santos said today.
Carlos Santos, who was speaking this afternoon in Praia, during a press conference, on the management of Cape Verde Airlines explained that the new agreement will allow the design of a “robust solution” to save the company and prepare it to restart the operations, which have been suspended since March 2020, due to the covid-19 pandemic.
According to the Minister, the agreement between shareholders, the State and Loftleidir / Icelandair Group, will be initialed in the next few days and will replace the previous one that was signed in 2017, but some of the clauses will remain.
To this end, the Board of Directors will consist of five directors, three appointed by Loftleidir / Icelandair Group and two by the Government, one of whom will be appointed by the Government as an executive director, with financial responsibility and will have broad powers for the approval of all payments in the company.
On the other hand, strategic decisions, namely, such as routes, the company’s Business Plans will be approved by a 4/5 majority.
”The companies and entities associated with the two reference shareholders who are TACV’s creditors must proceed to a reduction of the company’s debt, allowing a financial release from the company, and, in parallel, negotiations with other creditors are underway, seeking the same objective”, He pointed out.
The minister said that with the entry into force of the agreement, the three leasing contracts will give way to two and, consequently, the fleet will be composed of two aircraft and the term of validity of the referred contracts will be reduced to one year.
Carlos Santos also added that with this new agreement, the company should, in the next 12 months, refocus its objectives, goals, and target market directed to the reception routes of Cape Verdean emigrants and the countries that emit tourists, namely, Portugal and the United States of America.
To implement these measures, he assured that the State will inject 4 million euros (about 440 thousand Cape Verdean escudos) into the company to restart operations and to finance part of the estimated negative operating balance over a period of 5 months.
Regarding the negotiations between the company and the workers, he added that the matter is being analyzed by the board of directors, which is also currently negotiating the debt with creditors and suppliers.
At the time, he said that a plane should arrive next week.
In August 2017, a partnership was initiated between the State of Cape Verde and the Icelandair Group, “a group with recognized international experience and know-how in the field of commercial aviation”.
In 2019, the State of Cape Verde sold 51% of the national airline TACV for 1.3 million euros to Lofleidir Cabo Verde. Loftleidir Icelandic, a subsidiary of the Icelandair Group, holds 70% of the shares in Loftleidir Cabo Verde, while the remaining investors 30%.
The company has been working in consultation with Cabo Verde Airlines since 2017 in restructuring the company and developing a strategy for the company’s future.
