Madagascar Airlines has secured $40 million in financing from the World Bank to support its turnaround plan.
“The World Bank, satisfied with the progress of the recovery project, has agreed to provide financial support of $40 million, in addition to the $25 million already mobilised through the integrated growth project,” the airline said.
“The Government of Madagascar has reaffirmed its full support for Madagascar Airlines and is working to finalise the remaining 20% of conditions, which should be met by the end of the month."
The airline said it faced debt of around $80 million when under Air Austral's management, which ended in 2020. The company's debt would then increase to over $100 million during the pandemic.
In October 2021, Air Madagascar was placed under a collective debt settlement procedure, which was a government measure to ensure it continued operations and protected it from creditors, and thus formed Madagascar Airlines.
Under its partnership with the World Bank, the airline is currently looking to strengthen its governance to better comply with OECD international standards. This will include establishing audit, remuneration, and strategy committees.
“The World Bank's support reflects confidence in the viability of the Madagascar Airlines project and the strategic need for Madagascar to have a strong, secure and competitive national flag,” the airline said.
For the current fiscal year, Madagascar Airlines expects a positive operating result, which will be the first in “many years”.
“The company's current debts, mainly of state origin, will be integrated into the share capital, thus strengthening the group's financial structure,” the airline said.
At the start of this year, the government authorised the sale of two retired Airbus A340s, which local media reported were sold to a Chinese buyer.