Air Austral Receives EUR15 Million Boost to Aid Recovery

Air Austral (UU, St. Denis de la Réunion) has secured an additional financial injection of EUR15 million (USD15.9 million) from its shareholders to support its recovery efforts. This latest funding includes EUR6.75 million (USD7.15 million) from the Réunion regional government, approved on November 7, 2024, as part of the airline’s ongoing restructuring plan.

The regional contribution will come through SEMATRA (Société d’Économie Mixte de Transport Aérien), a public shareholder, following unanimous approval from the regional council. Run Aviation, a consortium of 27 local private investors, which holds a 55.18% stake in Air Austral, will contribute EUR8 million (USD8.4 million). These contributions are part of a broader effort to help the struggling airline return to an operating balance by March 31, 2025.

The airline has been facing challenges due to the continued grounding of two key aircraft, including an A220-300 (F-OTER, msn 55125) and a Boeing 787-8 (F-OLRB, msn 34491), due to supply chain issues. Despite generating EUR440 million (USD466 million) in turnover this year, up from EUR393 million (USD416 million) in 2023, Air Austral still faces an operating deficit. The airline aims for an operating result between EUR8 million (USD8.4 million) and EUR9 million (USD9.5 million) by the end of March 2025, although cash flow remains tight, necessitating further shareholder contributions.

During a plenary session, the regional council debated the airline’s restructuring plan, with Saint-Rose councillor Michel Vergoz expressing concerns about the airline’s future. Vergoz described Air Austral as being “in palliative care,” warning that the airline could collapse at any moment due to fierce competition from Air France (AF, Paris CDG) and despite previous financial support from the public sector.

This latest funding follows a restructuring plan approved in March 2024, which included EUR10 million (USD10.6 million) in financial aid, comprising EUR4.5 million (USD4.8 million) from the regional government and EUR5.5 million (USD5.8 million) from Run Aviation.

The airline has struggled with significant debt since the Covid-19 pandemic, accumulating EUR250 million (USD267 million) in debt, more than half of its 2019 turnover. To address these financial difficulties, the European Commission approved a restructuring plan in January 2023, which included EUR119.3 million (USD127 million) in state aid and EUR17.5 million (USD18.6 million) in compensation for pandemic-related losses. Additionally, the French government provided a EUR20 million (USD21.2 million) loan in January 2022.

With these ongoing financial challenges, Air Austral is focused on stabilizing its operations and working toward a more sustainable future, but the continued support from both public and private investors will remain crucial in ensuring the airline’s recovery.

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Sources: AirGuide Business airguide.info, bing.com, ch-aviation.com