TACV Cabo Verde Airlines Receives State Endorsement for Leasing a Boeing 737 MAX 8

The Government of the Republic of Cape Verde has approved yet another State guarantee, this time of 5.8 million euros, to the air carrier TACV, for investments, this time with the acquisition of the second aircraft.

According to the government resolution published this Thursday, June 15, which the Portuguese news agency 'Lusa' had access to, TACV – Transportes Aéreos de Cabo Verde resorted to a bank loan from Banco Cabo-Verdiano de Business (BCN), in the amount of 650 million Cape Verde Escudos (5.8 million euros), to continue its investment programme, this time with the acquisition of the second aircraft.

For the Executive, this operation is “fundamental” for the development of the company's activity, as well as the materialization of its financial stabilization plan.

“To carry out this operation, the aforementioned bank requested the State's endorsement as a guarantee for the loan and an inseparable condition for the completion of the financing”, the document reads, indicating that the term of the operation is nine months.

In order to face the situation of “undercapitalization” and the need for “financial restructuring” of the air carrier, the Government recalled that the State, as the majority shareholder, approved the granting of a financial contribution to TACV, in order to provide it with the means financial resources that allow it to continue to develop its activities and honor its commitments.

“However, to meet the financing needs presented in its Recovery and Stabilization Plan, the company has also resorted to other sources to raise funds, such as bank credit”, he said, recognizing the “relevant role” that TACV plays in the dynamics of the national economy.

In March of this year, Cabo Verde Airlines – the company’s commercial name – had asked for a one-year extension of the payment period for yet another loan, also with the BCN and for four million euros, claiming the impacts on the rise in prices of fuels.

TACV, which has been relaunching its activity for just over a year after the stoppage caused by the restrictions of the covid-19 pandemic, had already extended last February, simultaneously and also for 12 months, two other loans, in this case together with from Caixa Económica de Cabo Verde, in the amount of 100 million escudos (910 thousand euros) and more than 110 million escudos (one million euros).

Last December, the Government had already approved a State guarantee of 250 million escudos (2.2 million euros) to the company, to support the treasury and continue the operations and activities planned for 2022.

In February 2022, the Cape Verdean Government had granted another guarantee for a loan of 1.5 million euros to TACV, in view of “emergency needs”, such as the payment of salaries.

The Cape Verdean state plans to inject 1 billion escudos (9.1 million euros) annually into TACV over the next three years, to guarantee the stability and recovery of the airline, before re-privatising it.

In March 2019, the State of Cape Verde sold 51% of TACV for 1.3 million euros to Lofleidir Cabo Verde, a company 70% owned by Loftleidir Icelandic EHF (Icelandair group, which took 36% of Cabo Verde Airlines) and 30% by Icelandic entrepreneurs with experience in the aviation sector (who took over the remaining 15% of the privatized 51% share).

However, following the company’s stoppage during the covid-19 pandemic, the Cape Verdean State took over a 51% stake in TACV on July 6, 2021, alleging several non-compliance in the management of Icelandic investors and immediately dissolved the social bodies.

TACV suspended commercial flights in March 2020, due to restrictions on flights to contain the pandemic and only resumed operations, once again in the hands of the Cape Verdean State, in December 2021, after 21 months, with connections between Praia (island of Santiago) and Lisbon, extended in 2022 from the Portuguese capital also to the islands of Sal and São Vicente.

On May 17, the president of the Cape Verdean state company, Sara Pires, predicted the resumption of flights to Bissau, ten years later, and winter flights to Boston and Brazil.

“At the moment, Cabo Verde Airlines has flights to and from Lisbon. We, from the month of July, will be introducing flights to Paris and from the 'Winter IATA' introduce flights to Boston and Brazil”, he added.

TACV will operate from July with a Boeing 737 MAX 8, to add to the Boeing 737-700 rented since March 2022 by the Cape Verdean flag carrier from the Angolan counterpart TAAG, which has since ensured connections from Cape Verde to Portugal.