Madagascar's de Bailleul rebuilds the national trust

A government determined to set up a well-managed, independent airline; a leader capable of building a team to deliver a business plan designed to make money; and a financier prepared to fund it all, appear to be the right mix of ingredients to give Madagascar’s new flag carrier a fighting chance of success.

Air transportation is a critical resource for this massive island off the east coast of Africa in the India Ocean, an area larger than France. It is needed to feed passengers from the capital Antananarivo, located in the centre of the island, to its breath-taking coastal tourism destinations.

The task of developing a business plan capable of achieving the country’s goals was given to Thierry de Bailleul, who was appointed by the country’s president in November 2022. De Bailleul is an experienced airline leader with stints in senior roles at Qatar Airways, Emirates and Air France-KLM.

Madagascar Airlines began operating in April 2022 as a new indirectly state-owned entity, taking over operations from the country’s loss-making international and domestic carriers that had gone into bankruptcy.

For many years the country has had a variety of flag carrier incarnations. Generally, the airlines had one thing in common: mismanagement and political interference, a situation found in many countries around Africa as well as elsewhere, leading to an ailing business.

The new Madagascar Airlines was going to be different, but when de Bailleul arrived it was already not in great shape. It was losing money, racking up debt, had commitments for aircraft that he believed were unnecessary and continuing with unprofitable international services.

The answer was in de Bailleul’s view “quite straightforward. First, put the fleet right and put in place the resources so that we reach operational excellence. Second, we had a huge delay on the digital side. So, there is a whole batch of investments dedicated to digital.

“The third and key part in my mind is trust because it was an airline that had lost all the trust from customers and from airline partners because in the past there were lots of cancelled and delayed flights and missed passenger connections,” said de Bailleul.

“The whole spirit of this plan is to become a reliable domestic airline again before possibly becoming an international airline again,” he added.

A crucial element of the plan was money. Almost as soon as he arrived in Madagascar, one of de Bailleul’s first responsibilities was to meet with the regional head of the World Bank. The bank is a global institution providing low-interest loans, zero to low-interest credits, and grants to developing countries. 

“I knew the bank was interested by the [Madagascar Airlines revival] project, but only under certain conditions that were not yet met. And maybe they wanted to size us up a little bit,” said de Bailleul.

He presented his plan, dubbed Phoenix 2030, to the World Bank team and received positive signs that the bank would support it.

To put his plan in place and bring the World Bank on board de Bailleul needed two things. Firstly, a governance structure that allowed management to execute the business plan free and secondly formal approval from the state and its authorities to execute the plan.

It took a year, but in November 2023 de Bailleul got the green light from the government. This triggered a $70 million loan package from the World Bank to the Malagasy Government to re-finance Madagascar Airlines.

De Bailleul acted swiftly. All long-haul operations, using expensive ACMI aircraft, were suspended and a plan to acquire three Embraer E190-E2s was axed.

At the start of 2024, the first tranche of money from the World Bank was used to bring four of its ATR72s, which had been cannibalised for parts to keep a further two of the type flying, back into service, said de Bailleul.

From September the carrier will have five operational ATR72s in its fleet, as some leased aircraft were returned, while a sixth arrives in April 2026. The carrier will also bring in its own stock of spares for the ATR72s.

This fleet size is sufficient for the airline to re-organise its schedule to introduce two banks at hub Antananarivo, so travellers have two opportunities every day to connect to the dozen major cities around Madagascar’s coastline.

“It is an important move with the aspiration of encouraging mobility in the country and enable business,” said de Bailleul.

The hub move is also designed for Madagascar Airlines to offer services that will attract carriers like Air France and Emirates as partners, which is in train.

Another part of this plan has seen the carrier re-join IATA’s Billing and Settlement Plan after a decade away enabling it to re-establish interline agreements with other airlines. It has also gone with just one GDS – Amadeus – with the old airline structure having two GDS in place and will relaunch its website in October.

With all these actions the aim is to reach break even by the end of 2025, said de Bailleul.

The airline is in an advantageous position with no domestic airline rival and land travel is slow and difficult. “The roads are not a competitor. The train is not a competitor. If we do our job well as a team, and if we find a way to reduce the high fuel cost issue in Madagascar, then we can have a 20 per cent profitability.

“This is why I think we should get back to the international side because we should make enough money on the domestic to accept a small financial and economic risk to re-establish on long-haul,” he explained.

After Covid, traffic in Madagascar dwindled to just 350,000 passengers annually. De Bailleul conservatively predicts 15-20 per cent passenger growth for the coming six years with 750,000 passengers hoped for by 2028, which is consistent with the government ambition to reach one million tourists by that time.