The renationalisation of Cabo Verde Airlines (VR, Sal Amilcar Cabral International) is being challenged in the ICC International Court of Arbitration in Paris by former strategic equity partner, Loftleidir Cabo Verde.
The company, in a statement shared with ch-aviation, confirmed it had initiated proceedings against the State of Cabo Verde for breaching agreements entered between the parties concerning Cabo Verde Airlines.
The former majority shareholder said it had sustained heavy losses when the government in July this year unilaterally decided to expropriate, by decree, Loftleidir Cabo Verde's 51% share capital in Cabo Verde Airlines and unilaterally terminated a March 2021 agreement with its former equity partner for the airline to resume operations.
“Loftleidir Cabo Verde had already rejected all allegations of breach of contract alleged by the State of Cabo Verde and in order to enforce its rights, it initiated the arbitration proceedings. The International Court of Arbitration is the competent jurisdiction as mutually agreed in contracts between the disputing parties,” the company stated.
As reported previously, the government had accused Loftleidir Cabo Verde of failing to honour the March 2021 agreement to provide USD30 million for the restart of commercial services. The company has denied this.
For its part, the state said it provided a loan guarantee of USD14.2 million earmarked for the restart of services and to cover outstanding bank repayments of the airline. This was in addition to five government loan guarantees totalling EUR20.6 million euros (USD24.4 million) already provided to the airline since November 2020.
Cabo Verde Airlines has been grounded since March 2020 due to COVID-19 travel restrictions.
Loftleidir Cabo Verde – a 70/30 joint venture between Icelandair and Loftleidir Icelandic – bought the majority share from the government in March 2019. The intention had been to eventually fully privatise the airline.
Meanwhile, Cabo Verde's prime minister, Ulisses Correia e Silva, told the archipelago’s parliament last week the airline may resume commercial operations in December 2021.
Responding during a parliamentary debate to doubts raised by opposition MPs about the viability of the flag carrier, he said the state had assumed responsibility for the restructuring of the airline. “And if all goes well, as we are predicting, TACV, [as it is still known] will start operating during the month of December of this year", he said. The government had previously mooted the resumption of operations for March 2022.
