The Republic of Congo comes to Corsair’s aid

It’s now been a year since Corsair sought to complete a new round of financing to recapitalize itself. This operation, which had apparently come close to success on several occasions during the past year, has still not been completed. However, as revealed WorldThe French company is about to raise 30 million euros from several parties, including one particularly unexpected one, namely the Republic of Congo. Corsair confirmed this today.

According to its terms, the company “confirms that it has received a letter with a firm offer for a capital contribution of 30 million euros”. An amount that corresponds to what was expected for several months, according to an internal source at the address Gallery in October. This was already an amount that was almost completed at the beginning of the year before the bracket of the failed marriage with Air France began. What “satisfy the company’s financing needs and ensure its development”which has been continuing its operational restructuring since the previous recapitalization at the end of 2020.

The amount is all the more significant given that Corsair still hasn’t broken even, much less turned a profit, at the end of its 2022-2023 financial year, which ended on September 30. Despite a record turnover of 643 million euros, its losses could still exceed ten million euros, which worries some observers after 2023, which combined strong demand and high prices.

Corsair’s Plan B after the failed marriage to Air France-KLM this summer

OMRP, Guadeloupe and Congo

Corsair suggests that this amount will come from “from some of its existing shareholders, from the Department of Guadeloupe and the Republic of the Congo”. Again, no surprises for the first. Pascal de Izaguirre, the company’s CEO, congratulated himself at the end of September “that (its) current shareholders are still present. They are converts, convinced people who believe it. Most of them will again participate in this second round of discussion”. OF “majority”the formulation is still approved “to some”which means changes in the balance within the consortium of West Indian Overseas Investors R-Plane (OMRP) owned by the company from 2020.

West Indian local authorities also confirm their commitment, this time through the department of Guadeloupe. In 2020, it was precisely the region that mobilized an injection of 3 million euros into the OMRP consortium, as well as the Territorial Collectivity of Martinique. An approach consistent with the local desire to maintain a significant level of supply and competition compared to the Air France group and to avoid possible price increases.

A big surprise therefore comes from the Republic of Congo. If Corsair confirms the report, it is not detailing Brazzaville’s involvement or motivation in the story. According to information from World, “The Republic of the Congo could thus pay 15 million euros for holding half of the capital”. Which, according to our colleagues, Corsair neither confirmed nor denied. A foreign investor cannot take more than 49% of the capital of a European airline.

Strengthening towards Africa, where Air France dominates the market with Europe without real competition, is therefore likely. Especially since it is part of the strategy that Pascal de Izaguirre has been deploying for some time with the opening of several lines.

Overseas: senatorial report points to worsening territorial discontinuity (Air France, Corsair, Air Caraibes, Air Austral, Frenchbee)

The question of debt remains fundamental

Corsair hints at that “the offer remains conditional on its acceptance by the French state (in particular as the main creditor of the company)”. In addition to this necessary new money for Corsair, which will also be able to count on the peak of its sales to supplement its cash flow, the company also needs to take care of the bottom line, and therefore its debt. The total amount has not been disclosed, but it could be around 140 million, we said to ourselves not long ago internally. This recapitalization operation could therefore be linked to debt forgiveness by the state.

It remains to be seen what efforts the state could make, hence the negotiations with the Inter-Ministerial Committee for Industrial Restructuring (CIRI). This was already at the center of discussions during the attempted marriage with Air France, which leaned particularly towards the level of Corsair’s debts. If experts in the sector considered in October that Bercy could show little willingness after the efforts made in 2020, with loans worth 80 million euros and more than 25 million euros in cost deferrals, Pascal de Izaguirre confirmed that he is progressing very well.

For Pascal de Izaguirre (Fnam-Corsair) “French air transport will be more expensive” in ten years

Specter of distortion of competition

Another unknown is the reaction of the European Commission, which must give approval “under the European Union’s state aid rules”. According to Corsair “Discussions with the French state and the European Commission continue with the aim of reaching an agreement as soon as possible”.

Which probably won’t please the competition. During a meeting with the Association of Professional Aviation and Space Journalists (AJPAE) on Tuesday, Christine Ourmières-Widener, CEO of Air Caraibes and French Bee, Corsair’s competitors, assured “I wish Corsair many positive things”but he also warned that she “will examine whether the system that has been introduced does not distort competition”especially if it is state aid, when a similar operation already took place in 2020.