The Cape Verde government has announced that Loftleidir Icelandic (Reykjavik Keflavik) has been chosen as the strategic management partner for TACV - Cabo Verde Airlines (VR, Praia) ahead of the carrier's planned privatization.

Under the terms of the deal, the Icelandair Group unit will assist in the management of TACV with the overall aim of turning the island archipelago, located about 600 kilometres off the coast of West Africa in the Atlantic Ocean, into a competitive connecting hub, linking Europe, Africa, North and South America.

"We believe that TACV Cabo Verde Airlines is in a great position to take advantage of the unique geographical location of Cabo Verde," Erlendur Svavarsson, Senior Vice President of Marketing and Sales at Loftleidir Icelandic, said. "We will work with TACV Cabo Verde Airlines and the Government of Cabo Verde on restructuring the airline and then positioning it as the centerpiece of the future air hub operation in the country. To this end, we will draw on Icelandair Group’s successful experience in building a hub-and-spoke system to support an air hub operation in Cabo Verde.”

The Icelandic ACMI/charter specialist will oversee TACV's network planning, marketing, sales and distribution planning, as well as the restructuring of its fleet. In return, the Cape Verde government will pay Loftleidir at least EUR925,000 euros (USD1.087 million) for the year-long contract which can be renewed on expiration. According to A Semana, the contract will cost EUR100,000 euros in the first month and EUR75,000 euros for each of the remaining eleven months.

Speaking during the signing ceremony earlier this week, Svavarsson said his firm would lease one aircraft (presumably its B757-200) to TACV this winter to supplement the Cape Verdian carrier's own B757-200. Thereafter, the devised business plan will see TACV operating at least five aircraft by the end of 2018, growing to up to eleven over the next three years. The Sal Amilcar Cabral Int'l International Airport will also become TACV's new operating hub given its superior infrastructure to Praia.

In anticipation of the contract's start next week, TACV has already withdrawn from the domestic Cape Verde market leaving it to Binter CV (3B, Praia). The government will, in turn, acquire a 49% stake in Binter CV.

TACV's newly appointed Managing Director, Mário Chaves, has said Icelandair Group would assist the Cape Verde government in finding a solution to TACV's estimated EUR100 million debt overhang.

Once its restructuring has been completed, the Cape Verde government plans to offer TACV along with groundhandling unit Cabo Verde Handling and airport management group ASA, to the private sector. Icelandair Group will not acquire equity in the airline although government has said it would be willing to accept an offer.