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France: Rivals, Shareholders Make Bids For Bankrupt Aigle Azur

Bankrupt French airline Aigle Azur, which operated scheduled service to domestic and tourist destinations within France, Portugal and North Africa, has attracted more than a dozen bids from shareholders and rival carriers.

Aigle Azur, France's second-largest airline, operated an all-leased fleet of aircraft and provided charter and air cargo services. The airline, based at Paris Charles de Gaulle and Orly airports, filed for bankruptcy and was placed in receivership on Sept. 2, with all flights suspended Sept. 6.

Aigle Azur is the latest victim of high fuel costs and cutthroat competition from low-cost rivals in the European airspace. Cash flow problems also prompted the carrier to sell a part of its Portugal route network to low-cost rival Vueling, a unit of British Airways parent International Airlines Group (IAG).

The carrier also embarked on an ambitious campaign to expand from profitable medium-haul routes to long-haul destinations. Destinations in Algeria accounted for approximately half of Aigle Azur's operations; the carrier posted revenues of €300 million ($330 million) for 2018.

While most bidders have expressed interest only in isolated assets, several concrete proposals are said to be on the table, including bids by Air France KLM and EasyJet for the whole airline, with the aim of taking over takeoff and landing slots at Orly.

China's financially troubled HNA Group, parent of Hainan Airlines, is Aigle Azur's largest shareholder with a 48% stake, while airline investor David Neeleman holds a 32% interest and French businessman Gerard Houa has a 19% holding in the carrier.

In October 2012, HNA completed the acquisition of the 48% stake in Aigle Azur for €52 million. HNA's investment in Aigle Azur marks the first such stake in a French airline by a Chinese company, and the shareholding is almost the maximum permitted by European Union (EU) rules, which prevent a non-EU company from taking a majority interest in an EU airline.

HNA has been under intense scrutiny by the Chinese government following a clampdown on aggressive overseas deals. HNA sold a 9% stake in TAP Air Portugal in March through the Atlantic Gateway consortium for $55 million.

More than half of this indirect stake in TAP was sold for $30 million to Global Aviation Ventures, a U.S.-based venture capital fund focused on the aviation industry, with the balance acquired by Brazilian airline Azul Linhas Areaas Brasileiras for $25 million.

Neeleman, who acquired his 32% stake in Aigle Azur for an undisclosed amount from Paris-based private equity firm Weaving Group in November 2017, has co-founded four airlines — Morris Air, WestJet, JetBlue Airways and Azul — and is involved in the Atlantic Gateway consortium that holds a 45% stake in TAP Air Portugal.


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