In the latest turn of events surrounding the fate of Cabo Verde Airlines (CVA), the government of the island nation has announced plans to reclaim ownership of its flag carrier.
Citing concerns for the airline’s future, Prime Minister Ulisses Correia e Silva said Monday that a process had been initiated to retake control of CVA from the Icelandair Group, to whom the government sold a majority stake in 2019.
Concerns over the airline’s future
According to Barrons, the government said the new owners had ‘not demonstrated the ability to guarantee the sustainability and continuity of the company’s operations’. This is a rather quick change of heart from the Cape Verde authorities, as just this April, it was confirmed that the government intended to sell its remaining 39% of CVA, fully privatizing the airline.
Cabo Verde Airlines has not flown any revenue service since March 2020 due to travel restrictions associated with the COVID-19 crisis. The carrier had scheduled to resume operations on June 18th with a flight to Lisbon, Portugal. However, it seems the service was canceled, which may have prompted the government’s turnaround.
Who is Loftleiðir?
The Cape Verde government sold a 51% stake in CVA to Loftleiðir, also known as Icelandic Airlines. The company was first formed in 1944 by three Icelandic pilots. The airline merged with Flugfélag in 1973 to form Icelandair and ceased scheduled operations as Loftleiðir in 1979.
However, since 2003, Loftleiðir operates as the Icelandair Group’s wet lease and charter branch. Loftleiðir Cabo Verde specifically is a 70/30 joint venture between Loftleiðir Icelandic and other Icelandic investors.
Millions in state-support
The Cape Verde government still owns 39% of Cabo Verde Airlines, and the ca. 300 employees own 10%. The airline has received US$24.4 million in state-guaranteed loans since November last year. It currently has a fleet of three Boeing 757-200s, aged on average just over 26 years old.
Cabo Verde Airlines was established in 1958 and was designated as flag carrier when the island nation gained independence from Portugal in 1975. It was later nationalized in 1983.
Before the crisis, CVA served 14 destinations in nine countries from its hub at Amílcar Cabral International Airport on Sal Island. Beyond domestic services to other islands, CVA flies to Angola, Brazil, France, Italy, Nigeria, Portugal, Senegal, and the United States.