Air Seychelles Returns Boeings as Long Hauls Seen Too Expensive

Negotiations have started with American International Group Inc.’s plane-leasing unit to return two planes, Faure said in an interview today in Mauritius. “We returned two aircraft in November,” he said.

The state-owned airline is being restructured after the government announced it will no longer provide funds for day-to- day operational expenses. Since January, the state has disbursed 206 million rupees ($15 million), and such subsidies are “unsustainable” in the long run, Faure said.

The new business model implies a shift from “loss-making” long-haul trips to a regional approach, with intra-island services and flights to Mauritius and South Africa, Faure said. “There are risks” associated with the plan, he said. “Our priority is to cut losses.”

There will be job cuts among the airline’s 900 employees, with 156 million rupees earmarked in the 2012 budget for the company’s expenses and redundancy costs through March, Faure said.

Seychelles, an Indian Ocean archipelago, expects its economy to expand 4 percent in 2012 compared with 5 percent this year. Tourism accounts for 25 percent of gross domestic product, Faure said, with about 75 percent of visitors coming from Europe.