Air Seychelles: Administrators have three options
Following the announcement made on Monday October 4 by Air Seychelles and the Ministry of Transport stating that Air Seychelles is now under administration and it is being restructured withing the confines of the country’s bankruptcy protection laws, the Minister for Transport Antony Derjacques and the chairperson of the Air Seychelles board, Veronique Laporte, met with the press yesterday to shed further light on the situation.
“Right at the outset, I would like to state that Air Seychelles is of public interest and as the case is in court, we cannot usually give a lot of details but still we have come together to provide some information to the public. Bernard Pool, assisted by Suketu Patel, has been appointed administrator of Air Seychelles and they have been charged with drawing up a turnaround plan. The duty of the administrators is to see if the company can be firstly rescued, secondly whether the company can be restructured and reorganised and thirdly the issue of winding up of Air Seychelles. The management of Air Seychelles will provide all statements and business plan to the administrators,” stated Minister Derjacques.
Ms Laporte said it is very important to note that management has decided to take this route of reorganisation within a legal framework not because of the poor performance of the airline. “Today I stand and remove my hat to the team of Air Seychelles. Despite uncertainties, they have been doing a lot of work. The action of the board is to once and for all try and see how we can solve the liability we inherited which is putting an impediment on how we move forward and on the operations of Air Seychelles. As long as we have this liability hanging on our head, we cannot get certainty on our heads. I think it is important we did it like this and this has been in the process by previous boards and previous managements. Together with the past and present shareholders, we had to take a decision that is appropriate for all stakeholders. The board feels that Air Seychelles going into administration is the way to protect all stakeholders.”
Minister Derjacques noted that now the administrators will decide on the way forward for Air Seychelles even if the deadline has been surpassed.
“Air Seychelles has a business plan and the experts will have a very realistic opinion about the company. Now the decision has been moved to a third party to effect either the reorganisation, the rescue plan and if it is not accepted by the creditors, then to go back to the court to recommend a winding up of Air Seychelles.”
The joint press release by Air Seychelles and the Seychelles Ministry of Transport on Monday, October 4, placed the blame for the airline's unsustainable debt burden on its former Etihad Airways-led administration. The Emirati carrier has since sold its 40% stake back to the Seychellois government, which now controls 100% of its shareholding.
“Air Seychelles has faced significant challenges over the past 18 months arising from the Covid pandemic and its impact on international travel and tourism. However, Air Seychelles’ financial difficulties arise mainly due to significant debt that was incurred during the stewardship of the airline by Etihad Airways, which was previously a 40% shareholder in the company. This debt comprises amounts that were owed directly to Etihad and also loans of almost US $72 million that were funded by the capital markets and are now controlled by bondholders of EA partners."
What will happen in the meantime? In the meantime, it is in the government's plans to ensure that they minimise the impact of anything that happens at Air Seychelles.
“I can assure the current staff of Air Seychelles that while I am not saying anything bad will happen, but if it ever happens, the government will support all staff and look to assist them in seeking alternative employment. The airport will still be working as we need to make sure tourists keep coming in and have a stable economy,” explained the minister.
While it is the Seychelles Civil Aviation Authority (SCAA) that runs the airport, the ground handling services are provided by Air Seychelles and therefore a winding up of the airline will also affect these services.
The chief executive of the SCAA, Garry Albert, noted that they are monitoring the situation, to ensure that airport operations can continue.
“If anything happens, we at SCAA will ensure that the airport can continue to welcome flights to the island, where even if we have to, we will take up ground services ourselves and also seek foreign aid if we need to, to help on a temporary basis until a permanent solution is found,” said Mr Albert.
He said that SCAA is not in the business of ground handling but it can step in to offer any service, to ensure the continuity of airport services.
Ms Laporte concluded the meeting with a strong message: “The administration allows Air Seychelles to keep functioning. At the moment it is still an ongoing concern but it is still in operation. All staff are keeping their jobs. Administrators will be working with the management and the board. To continue our work, our liability should go. Aviation is very complex and we are making sure there is no disruption. At the moment what is really on our head is the liability of the bond holders. It is clear the government, the shareholder, has already said there is no money to be given to Air Seychelles. Today also as the chairperson of the board, through its business plan, we have already notified our shareholder that we do not need money to be injected into the operations for us to continue. The board stands by it! I stand strong with my management and the team.”