Aircalin (SB, Nouméa La Tontouta) is in early stage merger talks with fellow New Caledonian operators Air Calédonie (TY, Nouméa Magenta) and Air Loyauté (RLY, Nouméa Magenta) as it battles to overcome a dramatic revenue drop following prolonged civil unrest in the country that resulted in airport closures and street rioting. The airline is also reducing frequencies on some routes and axing others to deal with the downturn in passenger traffic.

Aircalin CEO Georges Selefen told journalists in Nouméa on July 10 that the carrier's monthly revenues, normally averaging USD18.3 million, had dropped to USD8.1 million as a result of the civil disturbances, and overall passenger numbers are expected to drop to 225,000 this calendar year, down from 455,000 in 2023. The unrest continues. This week, a man was killed in a shootout with police outside the capital. The protests resulted from proposed reforms that would allegedly marginalise the indigenous Kanak population.

"Aircalin is forced to take measures to preserve its sustainability and adapt its model to the new market reality," said Selefen. "These measures concern operations, employment, and cash management."

Selefen said he had held talks with Air Calédonie and Air Loyauté shareholders about a possible merger to rationalise air services. He also said 35-40% of the airline's 500 employees have had their hours reduced, all investments have been paused, and debt repayments, including a state-guaranteed loan to buy new aircraft, deferred until 2025. Both Air Calédonie and Air Loyauté are domestic operators while Aircalin is New Caledonia's state-owned international operator.

Since the unrest broke out in May, 317 out of Aircalin's 477 scheduled flights were cancelled through to early July, representing 66% of flights and impacting 29,005 passengers. "Added to this sharp drop in activity are pessimistic prospects for the recovery of travel in general and tourism in particular," said Selefen. "A drop in overall traffic of at least 50% is expected in the coming months."

On the same day as the CEO's comments, Aircalin announced a raft of flight reductions and two route cancellations resulting from the downturn in demand. Direct flights between Nouméa and Melbourne Tullamarine, only launched in December 2023, are cancelled with immediate effect, while direct flights between Nouméa and Tokyo Narita will cease on September 1 and will reduce to one roundtrip per week until then.

Nouméa-Sydney Kingsford Smith will reduce from three weekly flights to two from July 22, with one of those upgauged to an A330-900N; Nouméa-Brisbane International will downsize to one or two services per week, down from the current three; Nouméa-Auckland International will decrease to one or two weekly services, down from three; and Nouméa-Papeete via Nadi will go from two per week to one.

However, Aircalin adds that flights to Port Vila, currently paused, will resume during the August school holidays, with one A320-200Nperated roundtrip per week, while the five roundtrips per week between Nouméa and Singapore Changi are unaffected. Selefen also noted that he is keen to accelerate planned flights to Paris CDG via Bangkok Suvarnabhumi - which he maintains would assist in the carrier's recovery - to by the end of the year.