Pandemic Gives Trans Maldavian Airways to Carlyle Group

Reuters reported:

Carlyle Group Inc said on Thursday it has taken a majority stake in Trans Maldivian Airways (TMA), the world’s largest seaplane operator, from buyout firm Bain Capital following a debt restructuring deal.

TMA began negotiating debt relief with Carlyle and its other creditors after the airline grounded most of its fleet of 56 seaplanes last year, as the COVID-19 pandemic halted travel and tourism into the Maldives.

Terms of the transaction were not disclosed, but people familiar with the matter, who requested anonymity, said Carlyle took majority ownership of TMA from Bain in exchange for agreeing to restructure the airline’s outstanding debt of about $300 million.

The Carlyle Group backdoored TMA, stressed by plummeting travel in the global coronavirus pandemic.  CNN ran a story on the Maldive's barefoot pilots in 2019.

If you're heading to the Maldives for a holiday, there's a strong chance your journey will include a flight on a seaplane.

This popular Indian Ocean destination is made up of 26 atolls filled with over 1,000 islands occupied by dozens of resorts, all spread out over 90,000 square kilometers. 

 

That's where Trans Maldivian Airways comes in. 

 

The world's largest seaplane operator, it has a fleet of 50 aircraft flown by about 200 pilots and operates more than 100,000 flights per year, carrying passengers to dozens of Maldives resorts. 

I take it the Maldives didn't throw buckets of cash at its airline industry.  However, the World Bank did provide economic support to the Maldive Islands, as did the United Nations Development Program (UNDP) and USAID.  It's not clear how much World Bank, UNDP or USAID money TMA received, but Bain and Carlyle are very skilled at leveraging public dollars.  

Reliefweb reported:

 

The Maldives Development Update (MDU) notes that the country, post a massive pandemic led downturn, is firmly on the road to recovery. Thanks to successful marketing campaigns and relatively straightforward entry requirements, Maldives received more than 300,000 tourists in the first quarter of 2021. Assuming that a million tourists visit the country this year, the World Bank forecasts real GDP to grow by 17.1 percent in 2021.  

Oddly, unsustainable debt is what took TMA from majority Bain control to The Carlyle Group.  Blackstone once owned TMA, selling it to Bain for more than $500 million.

 

Consider the state of the Maldives given the impact of the pandemic:

The fiscal deficit reached nearly USD 900 million or 20 percent of estimated 2020 GDP. Total public and publicly guaranteed debt reached USD 5.6 billion or nearly 140 percent of estimated 2020 GDP. Although the recovery is now underway, Maldives’ fiscal deficit and debt ratio are expected to remain elevated over the medium term.

If the Maldives go under who takes them over?  Hopefully not a private equity underwriter (PEU).  Whole countries could be next for the greed and leverage boys, Blackstone, Bain, and Carlyle?