| Country : | MULTI COUNTRIES |
| Type of project : | Loan |
Three new regional African airlines take to the skies with support from Proparco
Sector: Aviation
Implementation: FINAIRCRAFT (100% subsidiary of AKFED)
Country: Burkina Faso – Mali - Uganda
Context
Air Afrique dominated Africa’s airspace for many years and when it went out of business in February 2002 it left a gap which was filled by new small transporters that were often in deficit and unreliable. Today, intra-African traffic – particularly East-West – generally has to transit via Europe. The sector does, however, show strong potential despite these difficulties and Africa’s air transport growth rate is higher than the global average. These challenges and needs can only be met by deeply restructuring the sector and building regional alliances. This is the aim of the present project.
The present operation is an ambitious project in terms of development and allows PROPARCO to support a long-standing partner, the Aga Khan Fund for Economic Development (AKFED) , in a new sector in Africa: civil aviation.
AKFED is the Economic Development Agency of AKDN (Aga Khan Development Network). This development network is a nondenominational group of institutions and private development agencies dedicated to developing countries. AKFED has been present in Africa for over sixty years in several activity sectors, particularly infrastructure.
Objectives
The AKFED project in African Aviation involves creating a pan-African aviation hub made up of three airline companies: Air Burkina, Air Mali and Air Uganda, under the majority control of AKFED. Major synergies will be developed among them under a regional alliance called CELESTAIR.
Project description
Proparco has allocated 19.5 million dollars of long-term financing to FINAIRCRAFT, a French-registered company held by AKFED, to refinance the acquisition of nine Boeing MacDonnell MD-87 and MD-83 aircraft that Finaircraft rents to the three companies in the Celestair alliance.
AKFED has given itself the means to achieve its ambition and has put in place the key elements required to ensure the success of the CELESTAIR project and the sustainability of this new regional African airline group.
Indeed, AKFED has made long-term investments to develop its activities in African air transport. AKFED is also supported by the expertise of MERIDIANA which already operates 17 MD80 series aircraft and holds the JAR 145 aircraft maintenance licence. MERIDIANA, which is controlled by His Highness the Aga Khan, is the technical partner for the airline companies in the CELESTAIR project.
Impacts
The success of the CELESTAIR project will contribute to the economic and social development of the African continent (reliability, speed of transport of goods and passengers).
Indeed, Africa needs reliable and efficient integrated transport infrastructure systems that can promote regional integration and make sure the continent takes part in globalisation. The CELESTAIR project is creating a sound pan-African airline group and is consequently helping to structure the airline sector and it directly supports economic growth. In 2004, the IATA estimated that the aeronautical industry had already generated 470 000 jobs and accounted for 1.7% of Africa’s GDP.
The project will also help strengthen market mechanisms. The CELESTAIR project is led by independent, high-quality private actors. It is introducing a rigorous professional management method and is helping to modernise airline companies. The training plans supported by AKFED contribute to transferring managerial, commercial and technical skills and strengthen the absorption capacities of the companies and their partners. The project – via efficient private vehicles – fuels a virtuous circle that can bring the local airline sector up to the best international standards for safety, quality and services.
Finally, the project meets the criteria of Social and Environmental Responsibility and safety. The airline companies that are members of CELESTAIR pay close attention to the management of dangerous products and ground pollution caused by operating and maintenance activities. This is set out in their operating procedures which are audited in the framework of IOSA certification. The project directly contributes – via the transfer of know-how, maintenance programmes and quality requirements – to improving safety conditions for African air transport.
Date and amounts
FINAIRCRAFT started its activities in 2008
From 2009, PROPARCO is participating in refinancing aircraft purchased by FINAIRCRAFT, the central hub of the CELESTAIR group organisation.
The financing amounts to USD19.5M (equivalent to €13M) out of a total cost of USD44M.
Contacts
Proparco: Benoît Verdeaux - Tel.: 33 1 53 44 37 50
| Useful links | ||
| AKDN | ||
| AKFED | ||
| Air Burkina | ||
| Air Mali | ||
| Air Uganda |