Madagascar Airlines (MGY, Antananarivo) has axed a plan to add E190-E2s, suspended its international operations, and replaced its chairwoman as it grapples with a "critical financial situation" and focuses on restoring its core domestic operations.

The carrier previously said in December 2022, it would source three E190-E2s via Azorra Aviation, but ch-aviation understands an agreement has never actually been signed with the lessor. Madagascar Airlines Managing Director Thierry de Bailleul, who took up his post around the time the government announced the plan, said that on reflection, the type was not as well suited to the carrier's needs as first thought. "It is too early for Madagascar Airlines to bet on an Embraer 190-E2," he said.

de Bailleul also said he had concerns about the Pratt & Whitney PW1100G engines fitted to the Embraers, saying there was too much uncertainty around their reliability. "There are huge concerns with these engines," he said. "The engine manufacturer who designs them certainly uses revolutionary, high-performance technology, but these engines remain fragile for the moment, and this represents a high rate of breakdowns." The agreement was reportedly amicably cancelled without any damages, interest, or penalties payable.

Long-haul ACMI ops axed

In a November 7, 2023, statement, Madagascar Airlines says since it launched in April 2022, it has accrued approximately USD50 million in losses and USD36 million in debts. It attributes this to the cost of relying on wet-leased aircraft to operate long-haul flights and the high cost of jet fuel. All of Madagascar Airlines' long haul flights operated on an ACMI basis, and the carrier says it was losing approximately USD300,000 per rotation. "Maintaining ACMI flights is simply economically untenable," the statement read.

Madagascar Airlines was operating ACMI regional and international flights to Paris CDG, St. Denis de la Réunion, and Dzaoudzi. They are cancelled with immediate effect. The planned resumption of flights to Mauritius is also cancelled. Variously, the airline has used a B787-8 sourced from Ethiopian Airlines, an A330-300 sourced from Air Belgium, and more recently, an A340-300 operated by USC (Germany). Madagascar Airlines also has six ATR72 types sourced from state-owned predecessor Tsaradia and used on domestic sectors.

An immediate pivot to domestic ops

de Bailleul says he is preparing a new business plan for the airline, which will require government approval. However, he says that profitability is attainable without relying on public funding "as long as we make choices of fleet and ambitious but reasoned and reasonable investments." He says the plan also has the backing of Madagascar Airlines' local and international banks and other stakeholders.

"Long-haul flights will resume within a few months, as soon as the company is able to operate dry lease flights," he said. The airline's statement added that it will refocus on its domestic network to "restore the fundamentals and return to sound management principles that we had to abandon."

That will involve restructuring the ATR - Avions de Transport Régional fleet by handing back some aircraft and reconditioning others, a return to preventive maintenance, replenishing stocks of parts, and hiring new engineering employees. "As the ATRs become operational, fly more, their rotations will be intensified for maximum aircraft use. There will then be a need for two or three additional crews," the statement reads. The six ATRs are evenly split between ATR72-500 and ATR72-600 types and fly to 11 Malagasy airports.

"Heavy losses (caused by) operating costs on the long haul had quickly dried up the company's cash flow, leading to the impossibility of paying our suppliers, including for the purchase of parts and maintenance equipment." Consequently, a substantial portion of the domestic ATR fleet has been grounded, causing "numerous delays, cancellations, and tensions."

On November 3, the board's chairwoman, Rinah Rakotomanga, also resigned, saying a deterioration of Madagascar Airlines' situation was having a substantial impact on operations. The following day, the airline announced Mamy Rakotondraibe as the new chairman. Rakotondraibe's LinkedIn page says he has been Director General of Caisse Nationale de Prévoyance Sociale Madagascar (CNaPS) for four years. Before that, he was managing director of DHL's operations in Madagascar. de Bailleul says the change will allow the airline "to start moving forward in a much more aligned way."