A subsidiary of the group has submitted a binding offer for an airline whose “location is ideal for developing connecting flights”.
Loftleidir Icelandic, a subsidiary of Icelandair Group, will, together with a party of Icelandic investors, submit a binding offer for a 51% stake in Cabo Verde Airlines.
Known internationally as Icelandic Airlines, Loftleidir Icelandic was a private carrier based in Reykjavík that ceased operations in 1979. The branding re-emerged in 2003 when a newly created wet-lease and charter subsidiary of Icelandair Group was named Loftleidir Icelandic.
The airline and the authorities in Cape Verde have been cooperating for some time. In August 2017, Loftleidir signed a deal with the government in the Atlantic islands on restructuring Cabo Verde Airlines.
That agreement also aimed to strengthen the international airport in Cape Verde, develop the islands as a tourist destination and build a hub for connecting flights. In addition, it was announced that the airline would be privatised. Cabo Verde Airlines already has operating licenses to fly scheduled flights to Europe and the United States.
Partly already paid
The purchase price for the new offer has not been divulged, but the acquisition will partly be paid for by work already completed by Loftleidir Icelandic’s employees, Icelandair Group says.
The deal is to be made through a new company, Loftleidir Cabo Verde. Loftleidir Icelandic holds a 70% stake in this company, and other investors 30%.
Icelandair Group says that the acquisition of Cabo Verde Airlines “does not have significant effect” on its financial statements since Cabo Verde Airlines will not be reflected in the group’s consolidated financial statements. The shareholding will be classified as an associated company.
“The participation in the acquisition of a majority share in Cabo Verde Airlines holds great opportunities for Loftleidir Icelandic, especially in light of the expected growth in passenger demand in Africa in the coming years,” outlines Árni Hermannsson, managing director of Loftleidir Icelandic.
“We have already participated in the restructuring of the company, and Cabo Verde Airlines’ operations are well suited to Loftleidir Icelandic’s projects around the world.
“The knowledge and experience already available within Loftleidir Icelandic and its sister companies has come to good use in restructuring the company and will continue to assist in further developments.
“Further opportunities are related to the shared use of airplanes from Icelandair Group’s fleet, and crews where applicable, as is already being done in various projects. In developing connecting routes, we can also draw further on Icelandair’s experience.
“In the case of Cabo Verde Airlines, we have opportunities for well-organized connecting routes between Europe and South America on the one hand, and West Africa and North America on the other, along with West Africa and Europe. The island’s location is ideal for developing connecting flights.”