The Icelandic airline group wants to buy the little-known airline to access a strategic mid-point in the Atlantic.
The government of Cape Verde says that Icelandair Group has been selected as its strategic partner in the privatisation of Cabo Verde Airlines.
Both parties will now enter into talks for the acquisition of up to 51% of the capital of the Cape Verdean airline, with the remaining 49% to be sold to other investors.
The sums involved in the sale have not been disclosed. If the plan falls through, the government aims to proceed with a new strategic partner, according to the news site Aviator.
Icelandair Group is in fact interested in buying two airlines whose commercial situation is more than gloomy, the Icelandic airline blog Flugblogg writes. Both are based on islands in the Atlantic that could give Icelandair new opportunities.
Cape Verde is an archipelago to the west of Africa, where Icelandair has already made an offer to buy 51% of the shares in struggling Cabo Verde Airlines.
Icelandair is familiar with the islands, having been to Cape Verde in August 2017 to sign an agreement to assist with the management of the carrier, whose two planes, a Boeing 757 and 767, perform flights to the Americas and Europe.
The second intended purchase is similar to the first – to buy share capital in Azores Airlines, formerly known as SATA Internacional, which is also on the edge of bankruptcy. The only difference is that the volcanic Azores are closer to Iceland.
According to local media, Icelandair Group had submitted a formal proposal for the acquisition of 49% of the airline. However the process has stalled, with several deadlines for the group to make a firm offer having passed.
The Azores carrier, which has a fleet of seven aircraft, has around $250 million in debt. But the Azores has tremendous tourism potential as a holiday destination, even being described as a “new Iceland” with a small population, beautiful landscape and hot springs.
The geographical position of both sets of islands would theoretically allow Icelandair to use them as bases to conduct low-cost transatlantic flights with stopovers, between southern Europe and Latin America, media speculate. This would help Icelandair address its seasonal imbalance, routing more aircraft to the south during the winter months.