Seychelles will take full ownership of its flag carrier, having reached an agreement with Etihad Airways (EY, Abu Dhabi Int'l) in which the United Arab Emirates carrier will sell for a substantial discount, the 40% stake in Air Seychelles (HM, Mahé) it has held since 2012, the Seychelles News Agency reported.

Following protracted talks, Seychelles received a 79% discount on the total liabilities that Air Seychelles owed Etihad, Patrick Payet, the archipelago nation’s secretary of state for finance, trade, and investment, revealed at a news conference on April 29.

The Seychellois airline had owed USD72.3 million to Etihad Aviation Group, but with the write-down, Seychelles will pay just USD11.34 million. However, besides this debt, a total of USD71.5 million is still owed to the group’s bondholders, who have so far been unwilling to accept drastically revised terms.

“We are going to pay only 21% and this liability has been taken over by the government. Repayment will start from 2022 onwards. The second negotiation that we have is with the bondholders, where we are proposing to them to pay only USD20 million,” Payet explained.

For the latter purpose, Seychelles is also negotiating a loan with the Trade and Development Bank, the financial arm of the Common Market for Eastern and Southern Africa (COMESA), and Payet pledged that further details would be provided once talks conclude with the bondholders.

“All of these liabilities will be in the government’s books, so Air Seychelles will have a clean sheet from the liabilities that they have,” he said.

In 2012, Air Seychelles was party to a bond as a member of the Etihad Equity Alliance, a debt that it and partner airlines accepted the responsibility to pay off before the bond reached its due date in 2021.

Meanwhile, new leadership will take control of Air Seychelles, as “in this phase of negotiations with Etihad Airways, there is a transitional agreement that has been signed in regards to the chief executive and chief financial officer,” outlined Magalie Essack, director for policy and strategy at Seychelles’ Department Of Civil Aviation.

“It states that the mandate of the CEO and the CFO employed by Etihad Airways will end on June 30, 2021. With the appointment of a new board, members are expected to undertake an exercise to look again at how a new CEO and CFO will be appointed,” said Essack, who has previously held positions at both Air Seychelles and Etihad Airways.

A new board is already being set up at Air Seychelles to be headed by Nane Nanty, a former finance manager at Etihad who is currently deputy CFO at Public Utilities Corporation, one of Seychelles’ biggest companies. The new board will review all of the airline’s operations and make recommendations to the government, Essack said.