Under its relaxed state aid rules tailored for the Covid-19 era, the European Commission has approved two French measures in favour of Corsair International (SS, Paris Orly), it said in a statement dated December 11.
It listed these measures as EUR106.7 million (USD129.5 million) in “restructuring aid” for the company and EUR30.2 million (USD36.7 million) in compensation for damages suffered due to the emergency initiatives put in place by governments to fight the pandemic.
“Corsair was in financial difficulties, which were aggravated by the coronavirus outbreak. Today’s decisions enable France to support the airline with two independent measures,” the European Union's antitrust chief, Margrethe Vestager, outlined.
“The restructuring aid will allow Corsair to partially finance a restructuring plan that should bring the company back to viability and will help avoid disruptions for passengers in the outermost territories of the European Union. The second measure will compensate Corsair for the damage suffered because of the coronavirus outbreak that hit the aviation sector particularly hard,” she added.
France notified the commission about the intended assistance last month. The larger measure, the restructuring aid, is composed of EUR21.9 million (USD26.7 million) in tax deferrals, EUR4.8 million (USD5.9 million) in tax credits, a soft loan of EUR18 million (USD21.9 million), and a participation loan of EUR62 million (USD75 million).
The European Commission said it had taken into account the fact that the amount of the restructuring aid represents less than 50% of the restructuring costs. The rest of these costs will be covered by its own means, from current shareholder TUI Group, from future shareholders - a consortium of tourism investors in the West Indies, Reunion, and Guyana will become a majority shareholder - and other resources including the sale of three aircraft.
Corsair International currently operates a fleet of four A330-300s and one A330-200 on routes from Paris Orly to Pointe à Pitre, Fort de France, St. Denis de la Réunion, and Abidjan, according to the ch-aviation fleets and ch-aviation capacities modules. It recently also resumed a route between St. Denis and Dzaoudzi on Mayotte and has announced plans to resume its Mauritius-Réunion route in May 2021. It leases all of its A330-300s but owns A330-200 F-HCAT (msn 285). It also owns two more aircraft, B747-400 F-GTUI (msn 26875 stored at Kemble, and B747SP F-GTOM (msn 21253) stored at Châteauroux Déols Marcel Dassault.
The European Commission also referred to a restructuring plan aimed at restoring the viability of Corsair by 2023 by cutting staff costs, concentrating Corsair’s activities on core profitable routes to French overseas regions, optimising the fleet, and abandoning loss-making routes.
It assured that Corsair had committed to competition measures mitigating the negative effects of the planned aid, such as not acquiring interest or holdings in other companies; not increasing capacity over the fleet in operation; not opening new routes except those identified in the plan; divesting slots; divesting its customer service activities at Orly; and closing its Paris-Miami International route. The airline has not benefited from rescue or restructuring aid over the last ten years, it added.
The measures “will help ensure the orderly continuation of flight services, in the interest of passengers, and will contribute to maintaining connectivity with French overseas territories without unduly distorting competition in the Single Market,” the statement stressed.
