Cape Verde Warning: TACV Airline Faces Potential Liquidation
Cape Verde’s Minister of Transport, João do Carmo, has delivered a blunt assessment of the nation’s flag carrier, Transportes Aéreos de Cabo Verde (TACV), warning that the airline may face liquidation if it cannot be saved through drastic restructuring.
Speaking to reporters in Praia following a series of high-level meetings with the World Bank and the State\’s Special Projects Management Unit, do Carmo emphasized that the current financial drain is no longer sustainable for the public treasury. “The State cannot bear this monthly responsibility,” do Carmo stated. “We must think of the country, the public treasury, and the Cape Verdean people.”
A Critical Financial Outlook
The airline’s financial health has reached a breaking point. According to recent government reports, TACV recorded a net loss of 637.6 million escudos (€5.8 million) in the third quarter of 2024 alone. Despite what officials describe as “robust operational performance,” the company is weighed down by staggering operating expenses. High leasing costs for aircraft, totaling 575 million escudos (€5.2 million), remain a primary driver of the deficit.
“The situation is very critical,” do Carmo declared. “We are talking about a company that lives permanently in a negative financial situation. We are going to put all scenarios on the table.”
Four Paths Forward
The Minister outlined a hierarchy of options to address the crisis:
- Deep Restructuring: A comprehensive overhaul of the airline\’s operations and debt.
- Strategic Investment: Bringing in private investors or forming strategic partnerships to inject capital.
- Business Model Redefinition: Shifting the company’s focus to adapt to modern market demands.
- Liquidation: The “last resort” scenario where the company would be permanently shuttered.
“It would be irresponsible of us to talk exclusively about the liquidation of TACV out of thin air without seeking alternatives,” the Minister added. “However, it would be even more irresponsible to keep TACV as it is. The country cannot handle it.”
Competition and Connectivity
The airline’s struggle comes at a time of increased competition. International observers, including the International Monetary Fund (IMF), have long urged the Cape Verdean government to reconsider its international operations. The rise of low-cost carriers globally has eroded TACV’s market share, leading the IMF to suggest that public resources should be redirected toward improving inter-island connectivity rather than subsidizing money-losing international routes.
In 2024, the government began this transition by separating domestic operations into a new public entity, CVsky. While domestic flights remain a state-controlled monopoly essential for island life, the international wing remains vulnerable to fuel price volatility and the expansion of budget airlines.
A Change in Political Direction
The future of TACV has become a focal point for the new administration. Minister João do Carmo took office in June following the African Party for the Independence of Cape Verde’s (PAICV) electoral victory on May 17. The previous administration had expressed caution regarding the airline\’s closure, citing a need to maintain direct links for the extensive Cape Verdean diaspora.
With a clear mandate and a worsening balance sheet, the new government now faces the difficult task of deciding whether the national pride of a flag carrier is worth the mounting price tag, or if the era of TACV has finally reached its destination.
Image: Pexels – Drinu Cutajar
