It's been a hot, hot summer for Aigle Azurwith increasing evidence of the poor financial situation of France's second largest scheduled airline, which had carried 1.88 million passengers in 2018. The situation became even more tense at the beginning of last week with a "mini-putsch" that saw Frantz YvelinChairman of the company, who was dismissed and replaced by Gérard HouaChairman of the France-China Foundation and representative in France of the Chinese conglomerate HNAPhilippe Bohn has been appointed Managing Director.
an unprecedented, illegal and surreal situation
But Frantz Yvelin was not to be denied. On Friday, the company's CEO regained control of the company with the help of the courts. In a press release, the CEO stated that " Aigle Azur has put an end to an unprecedented, illegal and surreal situation in which two individuals claimed to have the right to take control of the company. Denounced by 80% of its shareholders, the situation is now closed. [...] With the help of the police, we were able to enforce this court decision today. This puts an end to a totally absurd and illegal situation, without prejudice to the criminal proceedings that will be taken, as the company has already filed a complaint. ".
Aigle Azur has also appointed a provisional administrator to deal with the " the urgency and criticality of this unprecedented situation in French air transport and the difficulties facing Aigle Azur ". According to Frantz Yvelin, this measure would be exceptional.
However, the company seems to be out of breath. External factors such as the year-on-year rise in paraffin prices and a weakening euro have caused operating costs to soar. According to the financial daily La Tribune, the company owes more than 40 million euros to its creditors.
Above all, the carrier is paying for its lack of a clear strategy and the failure of its main shareholder, the Chinese group HNA, which holds 48% of its capital. This group is, among others, the head of Hainan Airlines (80 million passengers in 2018 and $555 million in losses) and its financial difficulties are so great that the Chinese government has had to guarantee a loan for its survival.
Aigle Azur, which has launched a ambitious expansion policywas certainly over-ambitious, and was therefore unable to count on its main shareholder. And it is precisely this risky strategy that is at the root of the French carrier's main financial difficulties.
Positioned for a long time as the airline specialising in Algeria, then Portugal and Africa, Aigle Azur has, in the space of a year, increased the number of routes it has opened to Algeria, Portugal and Africa. MoscowKiev, Berlin and Milan, Beirut but also launched long-haul routes to Brazil and China. The presence of a Chinese shareholder and a Brazilian billionaire in its capital probably explain this "strategic" choice. In fact, we are desperately seeking the coherence and logic of this network created in 18 months...
For passengers, Aigle Azur's debacle has resulted in a network that has been reduced to shreds. Berlin, Milan, Nantes, Moscow-Marseille and Marseille-Dakar have all disappeared, the Orly-Peking route has been postponed for a better day, while services to and from Sao Paulo will be officially closed on 27 September. Flights to Portugal can be booked on the airline's website, but are in fact operated by TAP Portugal. In July, the airline indicated that it had sold these Portuguese routes to Vueling. The best-served routes for the moment remain the historic Paris Orly-Algeria network, as well as routes to Moscow and Kiev.
Aigle Azur's assets should find takers. The company has 10,000 slots to OrlyThis is an airport where every slot is precious. This represents around fifteen flights a day. The carrier has the largest network of any French airline in the world.Algeriawith six destinations and more than a million passengers a year. These assets should certainly attract buyers. From Air France to the low-cost carriers present at Orly, such as Easyjet and Vueling, there will be no shortage of interest.
It is also possible that the Aigle Azur brand will survive. In fact, it would have every chance of becoming a niche companyparticularly in North Africa. Instead of Beijing or Brazil, Aigle Azur could (re)become the benchmark airline for the entire Maghreb - a market with a bright future. The receivership is expected to last two months, until the situation becomes clearer...
