Summary

  • Madagascar Airlines will receive $25 million from the World Bank for its turnaround plan, which focuses on fleet refurbishment.
  • The loan will also help enhance digital systems and services and strengthen the brand image.
  • The World Bank supports the shift to a more financially viable domestic market after long-haul flights were suspended.

Madagascar Airlines’ turnaround plan continues to gain traction, as the World Bank confirmed that it will provide the airline with up to $25 million. This follows an in-depth analysis of the Malagasy national carrier’s current situation and business plan.

Financing Madagascar’s turnaround plan

The World Bank will provide $25 million to Madagascar Airlines through the Economic Transformation for Inclusive Growth Project, which could also lead to an investment dedicated to developing the Malagasy aviation sector. The World Bank Country Director for Mozambique, Madagascar, Mauritius, Comoros, and Seychelles, Idah Z Pswarayi-Riddihough, confirmed the developments to Madagascar’s 2424.mg.

Pswarayi-Riddihough highlighted that Madagascar’s government requested help from the international financial institution to revive the national carrier. In November 2023, the World Bank, following a meeting with Madagascar’s Minister of Transport and Finance, agreed to support Madagascar Airlines in implementing its “Phénix 2030” turnaround plan, which was announced last year by the CEO, Thiery de Bailleul. The turnaround strategy received support from the World Bank following government approval.

Air Madagascar ATR Turboprop

Photo: ATR

The loan will be used for the airline’s investments, including refurbishing its ATR72-500 fleet, enhancing digital systems, improving services, and strengthening the company’s brand image. According to de Bailleul, the World Bank will provide the funds as an advance. The Madagascar Airlines CEO said,

“The World Bank is not there to repay creditors. This financial institution is there to finance us in important investments for our development and for our return to balance. We made a projection of our finances over five years, which we discussed together in detail. They understood that our company can return to balance from 2025 and earn money to repay this loan.”

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Supporting the Malagasy aviation sector

Madagascar Airlines, formerly Air Madagascar, underwent several changes in the fourth quarter of 2024. In November, the carrier withdrew its interest in purchasing Embraer E190-E2s and suspended long-haul flights to France. Recognizing the importance of air travel in Madagascar, the World Bank moved forward with its support for the Malagasy national carrier. Speaking to 2424.mg, Pswarayi-Riddihough said,

“Air transport is essential for Madagascar’s economy, particularly for the tourism sector, but also for access to services and opportunities for the population located in the least well-connected regions by the land route.”

shutterstock_2453705009

Photo: Elen Marlen | Shutterstock

However, she noted that Madagascar Airlines is in a challenging situation. Its operational performance has led to several million dollars of debt due to its loss-making long-haul flights. Last year, when announcing the turnaround plan, de Bailleul stressed that the airline’s ACMI flights from Antananarivo (TNR) to Paris Charles de Gaulle Airport (CDG) had become unsustainable, resulting in significant monthly losses.

The World Bank and the Malagasy government agreed to focus on the more financially viable domestic market. They also agreed to open the skies to interested international carriers to enhance internal connectivity and improve regional airports to meet safety standards. This year, the Malagasy government has met with a few airlines to invite them to launch flights to the Big Island.

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Focusing on fleet consolidation

According to 2424.mg, the World Bank recommended that Madagascar Airlines consolidates its fleet without diverse aircraft types to avoid further financial liabilities. The airline has decided to rationalize its fleet and focus on operating ATR72-500 turboprops.

Air Madagascar ATR72

Photo: Pierre-Yves Babelon | Shutterstock

The national carrier plans to have six ATR72-500s, with two expected to join the fleet this year through a sovereign guarantee from the state. An additional two aircraft are expected to be delivered between the end of 2024 and summer 2025.

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