Air Austral and Air Madagascar partnership headed for breakdown?
New phase of negotiations
On Reunion Island, it is being reported that the existing partnership agreement in place between Air Austral of Reunion Island and Air Madagascar of Madagascar are facing ongoing challenges as Air Austral enters into a new phase of negotiations to reduce their 49% shareholding.
It is now being said that the partnership between Air Austral and Air Madagascar, which was started in 2017, is fast heading to a breakdown.
Air Austral paid an initial capital injection of 15 million euros for its equity share, but it has been reported in Madagascar that the second agreed payment of 25 million euros has not been disbursed as was expected.
Both airlines confirmed back in 2017 that they had finalized and signed a deal under which the French-registered home carrier of Reunion Island would acquire a 49 percent stake in the Madagascar national airline.
The intent of this team-up was to enhance air connectivity between the islands and in particular lead to better long-haul links for Madagascar and Reunion Island.
Negotiations at that time were described as challenging, but it all ended well. A detailed business plan was apparently agreed upon between the partners, mapping out the road to turning Air Madagascar’s fortunes around over the next couple of years. The plan laid out that at least US$40 million was to be injected into Air Madagascar by Air Austral to provide additional working capital.
Air Austral is based at Roland Garros Airport in the French overseas department of Reunion Island located in the Indian Ocean. The airline operates scheduled services from Reunion Island to metropolitan France, South Africa, Thailand, and India, as well as a number of destinations in the Indian Ocean.
Air Madagascar is the national airline of Madagascar operating services to Europe, Asia, and neighboring African and Indian Ocean island destinations. Its main base is located at Ivato International Airport in Antananarivo. The airline also operates an extensive domestic network.