State Intervention Expected For Cabo Verde Airlines

In a recent statement, the Transport Minister of Cape Verde, Carlos Santos, said that state intervention in Cabo Verde Airlines is inevitable. The government will make an announcement very soon about the restructuring of the islands’ flag carrier, which hasn’t flown since March.

Cabo Verde Airlines
State intervention is expected in Cabo Verde Airlines. Photo: Getty Images

Cabo Verde Airlines to be restructured

As reported by Visão, Carlos Santos, Cape Verde’s Transport Minister, has said that state intervention will be necessary for the survival of Cabo Verde Airlines (CVA). He stated that an announcement would be made soon about resizing the airline. CVA ceased operations on March 18 when the government closed its borders to international travel to contain the coronavirus pandemic.

Santos was addressing the National Assembly in Praia during a debate on transport and its effects on the country’s development. The government has been criticized over the sale of 51% of the airline’s capital to Icelandair. However, in the parliamentary session last week, the minister guaranteed that the airline would continue.

He said the government would continue to back CVA and that the airline needs to refocus its short-term objectives, observe the spread of tourism, and should resize the company. Santos, who deals with transport and tourism, justified TCVA’s resizing saying that the worldwide retraction in demand is a reality. He stated,

“Very soon we will have an announcement about the company Cabo Verde Airlines, with backing from the Government. Objectively and obviously, the Government will have to intervene in this process, taking into account that overnight Cape Verde Airlines stopped having sales but continued to have costs. Inevitably, there will have to be a State intervention.”

Santos guaranteed that, during the negotiation process, the government would safeguard Cape Verdean taxpayers’ interests.

Cabo Verde Airlines 757
Cape Verde’s borders reopened. Photo: Anna Zvereva via Flickr

“Sudden” reopening of Cape Verde’s borders

Cape Verde reopened its borders on October 12 in a move that was described as “sudden” by Cabo Verde Airlines president and CEO, Erlendur Svavarsson. In a post on the airline’s official Linkedin page, he welcomed the opening of the borders, saying it was,

“an exciting first step on the long journey ahead to reinvigorating the tourism industry and the national economy of Cabo Verde.” 

The deputy prime minister of Cape Verde responded to the perceived criticism of the quick opening of the borders by saying that it was a sovereign decision. As such, the government didn’t have to consult or warn anyone.

However, despite the relaxation of international travel restrictions, CVA management is not planning to resume flights. The level of COVID-19 cases in Cape Verde rose to its highest level on the same date that the borders were opened. Svavarsson said that tourist interest in the country was low because of the coronavirus transmission rates.

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Cabo Verde Airlines does not plan to resume flights yet. Photo: Anna Zvereva via Flickr

The sale of 51% of Cabo Verde Airlines

In March last year, the Cape Verde government sold 51% of the state-owned Transportes Aéreos de Cabo Verde (TAVC) to the Icelandair group for $1.54 million (€1.3m). This year, the government sold 10% of the remaining shares to workers and emigrants. The other 39% of shares were to have been sold on the stock exchange but will now stay in state ownership.

Do you think state intervention is right for Cabo Verde Airlines?