Air Austral (UU, St. Denis de la Réunion) will receive another financial boost of EUR15 million euros (USD15.9 million) from its shareholders, including a EUR6.75 million (USD7.15 million) contribution approved last week from the Réunion regional government.
The regional contribution will be made through public shareholder SEMATRA (Société d'Économie Mixte de Transport Aérien), following unanimous approval during a plenary session of the regional council on November 7, reported Franceinfo and Imaz Press Réunion. Run Aviation (St. Denis de la Réunion), a consortium of 27 local private investors that own 55.18% of the airline, will contribute EUR8 million (USD8.4 million). The funding aims to help the struggling airline return to an operating balance by March 31, 2025.
According to a report to the regional council, Air Austral faces an operating deficit linked to the continued grounding of two aircraft due to supply chain challenges. According to ADS-B data, the AOGs are one A220-300, F-OTER (msn 55125), and one B787-8, F-OLRB (msn 34491). This comes despite a EUR440 million (USD466 million) turnover this year, up from EUR393 million (USD416 million) in 2023, councillors were told. The airline aims for an operating result of between EUR8 million (USD8.4 million) and EUR9 million (USD9.5 million) by the end of March 2025. Nevertheless, cash flow remains tight, prompting the need for additional contributions from shareholders.
The unanimous vote followed a debate in the plenary session on the airline's restructuring plan, where Saint-Rose councillor Michel Vergoz described Air Austral as being "in palliative care", expressing concern that the airline could "die suddenly" despite the millions of euros of public money injected over several years. He believes that competition from Air France (AF, Paris CDG) could deal the fatal blow at any time.
According to the restructuring plan approved on March 7, 2024, Air Austral was to receive EUR10 million (USD10.6 million) in financial support, including EUR4.5 million (EUR4.8 million) from the regional government through SEMATRA (44.82% shareholder) and EUR5.5 million (USD5.8 million) from Run Aviation.
In the wake of the Covid-19 pandemic, Air Austral accumulated debts totalling EUR250 million (USD267 million), more than half of its 2019 turnover. To help address this, in January 2023, the European Commission approved France's restructuring plan for the airline, which included EUR119.3 million (USD127 million) in French state aid and EUR17.5 million (USD18.6 million) in compensation for pandemic-related losses between March and June 2020. Additionally, in January 2022, the French state provided a EUR20 million (USD21.2 million) loan to the airline.