Air France and Groupe Dubreuil are rumored to be on the cusp of a joint takeover of bankrupt French carrier Aigle Azur.
A French court has granted Azur a period of grace to consider any rescue plan the two airlines come up with. According to Reuters, the court began the process of liquidation of Azur on Monday. It has since allowed two more days of due diligence.
Should Air France-KLM and Dubreuil (a French automotive and distribution conglomerate) come up with a suitable rescue package, the fate of Aigle Azur will be much improved. However, as things stand, it is still plausible that the company will be declared insolvent.
Azur went into receivership on the September 2nd leaving 1,150 employees jobless.
It is believed Azur’s downward spiral is linked to “operational and management issues linked to its long-haul expansion,” writes Aviation Week.
We have emailed Air France-KLM for a comment on the proceedings but have so far received no reply.
The delay of two days was announced in light of bids on the table from Franco Dutch holding company Air France-KLM and voracious business consortium Groupe Dubreuil. Air-France-KLM is 14.3% owned by the French government.
The deadline now stands at midnight tomorrow (18/9/19). If the two companies are not forthcoming with a suitable plan for rehabilitation, Azur will be declared bankrupt and have its assets sold off.
According to Reuters, easyJet also expressed an interest in the troubled carrier. Last week it put forward to a proposal for the acquisition of the French tourist carrier. However, easyJet’s Executive has since revealed its interest to be merely speculative.
Air France’s Hop! also acknowledged an interest but this has since been withdrawn.
The medium-haul tourist carrier Aigle Azur has suffered the same fate as other low-cost operators in recent months. The rising cost of fuel and more robust competition have proved harbingers of doom for airlines such as Air Berlin, Monarch and Swiss SkyWork.
On September 3rd this year, after revealing millions of Euro of debt, Aigle Azur ceased operations. That left thousands of passengers stranded and unable to recoup the costs of their travel.
The carrier’s debts have since been estimated to total around 148 million Euro. Two unions representing workers left in the lurch by Azur’s bosses say the 800-strong workforce are relying on them to proffer Air France and Dubreuil in order to stop the rot.
Air France-KLM agreed last week to consider a joint restorative offer with the Dubreuil Group. Both companies have vested interest in doing so. Air France is keen to soak up Azur’s Orly slots and take charge of lucrative Algerian holiday traffic. Dubreuil (with subsidiaries Air Caraïbes and Frenchbee) eyes an expansion of its long-haul operations to South America.
The two-day delay allows both time to consider the wider implications of taking over a company with such a considerable amount of debt.