Air services in overseas sectors entrusted to Air France-KLM, Air Caribes-French B and Corsair-Air Austral: State perspective – Aviation

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Strategic errors in Air Austral’s management, employed by Didier Robert, risked depriving Reunion of control of their air separation.

Wednesday, August 3, 2022, by Manuel Marchal


An article in Le Monde confirms that the state is in a strong position to restructure air services from Paris to the Caribbean and the Indian Ocean to maintain competition: Air France-KLM, with state shareholders, Air Caribe and its affiliate French Bee, and Corsair-Air Austral. Consolidation. Didier Robert’s desired Air Austral management had tactical errors that put the state in a strong position. Air Austral’s serious difficulties predate the Covid-19 pandemic, as evidenced by the sale and injection of large assets of public funds through SEMATRA in the form of shareholder loans and various bailouts, not to mention “regional continuity” vouchers, more than 30% of which Air Austral owns. Austral benefited, given its market share at the time. As a result of this management, the state of Réunion has the possibility of withdrawing its air access control by placing Air Austral in a holding company common to Corsair. If the state imposes its vision, will it be possible to build Reunion Airlines again?


“Le Monde” published an article on August 1 providing an update on discussions on the future of Air Austral. Our colleague points out that:

“The European Commission, which initially asked France to notify it of a rescue plan before the end of June, is growing impatient. But the meeting held at the Ministry of Economy and Finance on July 18 to close the file ended in failure. »

“During this meeting, the Bersi parties presented a plan drawn up under the auspices of CIRI (Inter-Ministerial Committee for Industrial Restructuring), which involved a compromise between Air Austral and Corsair, its cousins ​​in the West Indies. This arrangement, according to our information, consists in placing the two companies under a joint holding company into which 120 million euros of new money will be injected: 55 million euros of capital from Réunion, 30 million from West Indian investors and, finally, , Equerre Capital Partners ( 35 million contributed by …).

The fund will mainly be supported by the state, with the provision of 320 million euros in debt forgiveness related to Air Austral. (…)

“In any case, regarding Air Austral, it is not Brussels that will decide between the two plans presented. It is up to the French government to choose. Barsi believes a merger with Corsair overseen by Equerre Capital Partners is the best guarantee of recovery. »

About 3 groups of service restructuring

This extract confirms the State’s preference for the merger of the Guadeloupe company Corsair with Reunionese Air Austral, with the aim of forming a group with sufficient critical mass to form a foreign company on the model of the defunct AOM-Air Freedom.

The state has made considerable efforts to help Air France-KLM, of which it is a shareholder. Its Air France subsidiary is one of France’s flag carriers in the world, a symbol for Paris that should not be lost. This is why Air France-KLM will continue to serve West Indies, Guyana and Reunion daily. By doing this, the state clearly no longer wants to help companies so that they then engage in a price war that weakens them in the long run. Corsair and Air Austral offer an equivalent offering and both face problems. “Le Monde” recalls that the rescue of the Corsair cost the taxpayer 130 million euros. State estimates Air Austral’s debt will cost more, and only the state has enough funds to cover it. It is therefore in a strong position to impose a restructuring of the air offer between France and the Caribbean on the one hand and France and the Indian Ocean on the other. This restructuring will result in the coexistence of three groups to maintain competition: Air France-KLM, Air Caribe and Corsair-Air Austral. For Paris, this will clarify the situation and settle once and for all the issue of serving the regions of Orly and Roissy:

– For the Caribbean (Guadeloupe, Guyana and Martinique): Air France-KLM, Air Carabas and Corsair-Air Austral

– For the Indian Ocean (Reunion and Mayotte), low-cost subsidiary of Air France-KLM, Corsair-Air Austral and French B, Air Carabas

Air Austral can keep its “French Bee” to overcome the crisis

Didier Robert’s desired Air Austral management had tactical errors that put the state in a strong position. Air Austral’s serious difficulties predate the Covid-19 pandemic, as evidenced by the sale of large assets and the injection of public funds through SEMATRA in the form of shareholder loans and various subsidies, not to mention “regional continuity” vouchers, more than 30% of which benefit Air Austral. Austral. As a result of this management, the state is likely to withdraw from Reunion, a tool to open Air Austral by placing it in a holding company common to Corsair.

Air Austral had another project in partnership with Airbus, run by former management Gerard Etheve and chaired by Paul Verge: building a low-cost long-haul subsidiary, the Outremer 380. The company was to fly the Airbus A380 with 800 passengers. Since 2012, air ticket prices have increased by 30% annually for all and without subsidies. If this project had continued, French B would not have existed and Air Austral would have had this lever for growth. Because it appears that contrary to the claims of Air Austral’s management in the name of Didier Robert, French B did not cannibalize Air Austral’s customers, it increased passenger traffic with a different offer.

A preference for clientelism over development

But this project was in competition with Didier Robert: using public funds from the region to create popularity, because with Outremer 380, there was no need for “regional continuity” vouchers to beg from the region to travel cheaply. Moreover, the project overshadowed Air France, which could not match the price because it did not have an 800-seat Airbus A380 in its fleet.

The result: Didier Robert appointed an Air France executive to head Air Austral. The latter rushed to shut down the A380 project. The concept was then picked up by Air Caribe, which replaced the A380 with the latest Airbus A350 design and lower operating costs to build the French B.

Consequence: Reunificationists stand to lose an irreplaceable tool for opening up

So the question is: If the state imposes its vision, will it be possible to build Reunion Airlines again?

MM

Photo prefecture of reunion.


View online: https://www.lemonde.fr/economie/art…


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