Government Extends Support to Cabo Verde Airlines Amid Financial Resurgence

The government of Cabo Verde has given the green light to the General Treasury Directorate to extend a state guarantee to Transportes Aéreos de Cabo Verde, S.A. (TACV) for a loan worth 250 million escudos (equivalent to $2.4 million USD) secured from Caixa Económica de Cabo Verde. This decision follows the company’s resurgence after its privatization process was halted.

As per Resolution No. 27/2024, released on March 28, 2024, and published in the Official Gazette, the state’s guarantee for the bank loan is aimed at shoring up the company’s cash flow. The extension request for the loan’s maturity, extending it from four to five years, was submitted to Caixa Económica de Cabo Verde and granted approval. The guarantee, provided for the operation, is prolonged for a commensurate period.

Against this backdrop, and in a bid to streamline the inflow and outflow of funds, the resolution elaborates that the company is readjusting its financial obligations, including the aforementioned loan, in line with its medium to long-term activity plan.

Presently, the company is executing its Interim Business Plan 2023-2027, which encompasses various investments to sustain and broaden operations, ensuring the business’s sustainability. As part of this initiative, financial responsibilities, including the aforementioned loan, are being restructured.

Transportes Aéreos de Cabo Verde (TACV), formerly known as Cabo Verde Airlines, sought state assistance as a guarantor amidst challenges exacerbated by the health crisis and complications linked to its renationalization. On Feb. 2, 2023, the Council of Ministers authorized the General Directorate of the Treasury to provide two necessary guarantees, as requested by the carrier. These guarantees facilitated a twelve-month moratorium for settling two loans secured with Caixa Económica de Cabo Verde, including 100 million escudos (approximately $972,620 USD) and 110,265,000 escudos (approximately $1,072,459 USD), respectively.

These loans, alongside others, were secured by TACV to revive its operations, which were suspended between March 18, 2020, and December 2021, initially due to the COVID-19 pandemic, and subsequently due to disputes between Lofleidir, its former majority shareholder (51%), and the Cape Verdean State. However, despite resuming operations post-renationalization, the operator encountered fresh challenges, such as an 80% surge in fuel prices between January and June 2022, attributed to the conflict in Ukraine.

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Victor Shalton

Victor Shalton's love for aviation can be traced to when he was 11-years-old. As a seasoned aviation writer, he takes pride in providing the best aviation coverage around the globe and is passionate about advancing his skills in the aviation space. In addition, he loves travelling, writing, arts and while his speaking engagements have taken him around the world, he is proud to call Nairobi home.

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