Air Seychelles has entered administration, seeking to protect its operations and jobs while it tries to settle debts.
The government-owned airline said it will continue to operate normally during the reorganisation process and that it expects the administrators to present a rescue plan in 3-6 months.
The move to appoint administrators comes after bondholders filed a petition to wind up the company over monies owed.
The African carrier said in a joint statement with the Ministry of Transport on October 5, 2021, that while it has struggled during the COVID-19 pandemic, its financial difficulties were mainly down to debt incurred while Etihad Airways was a 40% shareholder in the company.
The debt consisted of monies owed directly to Etihad and loans of almost $72 million, which are now controlled by bondholders of EA Partners, a special purpose vehicle incorporated by Etihad.
The government of the Republic of Seychelles bought Etihad’s stake in the airline in April 2021, making it the sole owner. Air Seychelles said the government negotiated a “substantial discount” in the $70 million debt it owed to Etihad.
However, the government and Air Seychelles have not been able to reach agreement with EA Partners on repaying the remaining debt. A senior government official told Reuters on May 6, 2021, that it would not be able to offer bondholders more than $20 million to settle the $72 million debt.
EA Partners has now presented a petition seeking to wind up Air Seychelles, a move which Air Seychelles called counter productive. The administration process instead means it can continue operations.
“If the winding up that the bondholders seek takes place, the creditors of Air Seychelles (including the bondholders) will receive repayment of only a very small fraction of their debts,” the two declared in the joint statement.
“Further, the winding up of Air Seychelles would bring an end to its operations and so leave Air Seychelles’ employees out of work.”
Air Seychelles is the national carrier of the Republic of Seychelles and was established in 1978. It flies to Johannesburg, Mauritius, Mumbai, and Tel Aviv, plus operates domestic and charter flights throughout the archipelago. It describes itself as a “core pillar” of the national economy due to its role in driving tourism for the country.