|The Courier N° 122 July - August 1990 - Dossier Tourism - Country Report: Mali (EC Courier, 1990, 104 p.)|
My ambition is to make Air Afrique a real means of economic integration between the countries of Africa
Recorery under way. First reports positive - this is what they, are saying about Air Afrique in the international press now, although the multinational airline once nearly stopped business altogether. The company, which was set up by the Treaty of Yuoundn 1961, expanded steadily for the first 25 years hut went into rapid decline in the mid - eighties. Turnover declined, running costs and overheads increased and the financial situation was so had that bankruptcy seemed imminent. In 1987, the deficit was CFAF 8.2 billion, turnover CFAF 117.3 billion and things were going from had to worse. By 1988, turnover was down to CFAF 113.8 billion and the net loss Up past the CFAF 14.4 billion murk. Was the hell to toll for the roan antelope, the emblem which figures on all Air Afrique planes?
In March 1987, the Heads of State of the 10 members (Benin, Burkina Faso, Central African Republic, Chad, Congo, CdIvoir e, Mauritania, Niger, Senegal and Togo), which have 72% of the shares distributed equally between them (the other 28% belonging to Sodetraf; the African Air Transport Development Company, 75% of whose capital is in the hands of the Group of United Shippers and 25% the Caisse des Dts et Consignation). invited Ivorian President Fx Houphouet - Boigny to find a way of putting Air Afrique back on its feet. At a second summit in Cotonou in August 1988, it became clear that they could depend on France for a considerable amount of financial support - about CFAF 37 billion - and they agreed on the principle of having a company chairman who was not a national of any of the member countries, a decision which inevitably caused a stir in Africa. Whoever would be willing to produce a diagnosis and devise and implement a plan for recorery in these difficult conditions?
The man chosen for the job was Yves Roland - Billecart, a 63 - yeur old Inspecteur des Finances and graduate of the National School of Administration in Paris. He had no ties with the transport sector, but he knew Africa well, having begun his career in Tunisia, spent 10 years or so in Algerian affairs and then built himself a solid reputation in finance, first as Deputy Director - General (1968 - 79) and then Director - General of the Caisse Centrale de Cooption Economique. He is, as he puts it himself, a banker first and an economist only second. In this interview, he explains how he came to take on the top job in Air Afrique on 3 March 1989 and outlines the first steps he took painful ones too, in some cases, as they included laying off 1600 staff: He also gives his first years results a 12% increase in turnover to CFAF 127.2 billion in 1989, a 6.2% increase in traffic (754 000 passengers) and net profits of CFAF 366 million (including a CFAF 269 million trading profit proper).
On 17 May, a few weeks after this interview was conducted, the Chairman of Air Afrique announced that five 310 - 300 Airbuses had been ordered and options taken on a further four Deliveries will begin in mid - l991 and will be spread until 1994, or perhaps even 1996, if the options are taken up. The total cost of renewing the fleet will have reached US $ 1 billion by the end of the operation (US $ 500 - 600 million at current prices), hut it will provide the airline with more, and more suitable, planes for its flight network The use of a single type of aircraft will reduce operating costs, and the Airbus should ensure fuel savings of up to 20%.
So Air Afrique seems to have found its deus ex machina and its structural adjustment seems to be bearing fruit. The strength that comes from having full powers, combined with the stringency of the financier who is not a sense of humour (Dont they talk about Billecartisation in Africa now when a white man turns Up to ran a firm?) has enabled the company to take off again.
· Mr Roland - Billecart, some of the comments when you were made Chairman of Air Afique just over a year ago were rather critical with people wanting to know why a Europecm should head an African company. How do you see that period now a year later, and how did you manage to fit into an environment which you werent even familiar with at the beginning?
Those are the very questions I asked myself when I was sounded out about taking Air Afrique in hand. The first thing to make clear is that it was the Africans who did the asking and that nothing was forced upon them, because Ive heard people say that Frances aid was tied to the appointment of a European Chairman. Let me tell you that it was the Africans who asked me to take over the company. Why me? Im not an airline specialist, after all. Well, probably because I had some kind of a reputation in Africa through the jobs I had before. As you know, I was Director - General of the Caisse Centrale for 10 years and Deputy Director - General for 10 years before that, so I know Africa well and I knew most of the Heads of State of the members of Air Afrique personally. Thats why they came to me, I think.
They were looking for someone who was known to be a stringent manager. When [arrived at the company, the fact that I wasnt a transport specialist was rather a good thing, as it didnt look like a step into the past. Although Air Afrique had an African Chairman from the word go, the Deputy Director - General was a UTA man for a very long time and, if they had appointed a UTA man this time, it could have looked like a move back into the past Here they are again! Thats the first thing my predecessor, Mr Ikonga, who was still here when the first contact was set up, told me. You dont realise that the fact that its you he said, is a terrific relief to us all. When we knew that the Heads of State had decided to call in a non - African, we were very worried about it being seen as the big return of our French UTA partners. But you arent an air transport man, so for us youre neutral! . And I told the company that. well, I hadnt come to carve out a career here. I look at it as being on mission. Ive been given five years to put the company back on its feet and my age - Im 63 and the very nature of the job are clear indication that I shall be handing what I hope is a sound company back to the Africans when I go. So there is no question of a step backwards. I dont think Im the best person to say how its perccived in the company today. Youd better ask the staff. But I can tell you what I think and that is that the staff have stuck to what I said about everyone having to roll up their sleeves and get down to work to save Air Afrique. They got going and 1 have to say that, although there havent been any wage increases for the past 10 years or so and all promotions have been frozen, everybody has made a really surprising effort. Obviously they all realise that the company was in a drastic situation and nearly had to close down and that a fair number of costs clearly had to be cut Those who were lucky enough to stay know that it is through their work that the situation will be righted, because, clearly, if we manage to get Air Afrique out of the woods, we can go for a policy which will improve the staff situation again.
· There was still some fairly hardline negotiating when you first arrived nere as crisis manager wasnt there, with you insisting on full powers perhaps because you remembered UTAs previous experience with the co - munagenzent of Air Zaire. So you came and the staff knew that some of them would have to go...
I was asked on 17 August 1988 whether I would do the job if it were offered and nine days before, on 8 August, the Heads of State of the 10 member countries had met in Cotonou and decided to have a Chairman with full powers, someone who was completely responsible for management and with nothing to prevent him from doing as he saw fit. They didnt want a national of any of the member countries, obviously. They wanted someone to whom they could say: Were giving you all the powers you need to put the company back on its feet and we want results. And what I said to that was, obviously: Thats fine. I really do want proper powers because that will give me proper responsibility. And I also said that I couldnt undertake to do the job until I had seen the size of it - which is why, although this all came up on 17 August 1988, I didnt become Chairman until 3 March the following year. There had to be a gestation period for me to devise a recovery programme and it went quite quickly, because I handed it in on I December. Then the States had to digest it and agree to it and that is why I had time to size up the problems and lay down my terms and they had time to take their decision - which they did, in full knowledge of the facts, just over a year ago.
· How healthy is Air Afrique at the moment?
We have already published our results and we have managed to get the company out of its deficit. The accounts for 1989, which I shall be handing to the Board in a day or two (1), show net operating profits for the first time for years. This is a spectacular recovery, because we lost CFAF 14 billion in 1988, CFAF 11.3 billion of them in operating costs and we are going to wind up 1989 with a small surplus of CFAF 366 million, CFAF 269 million of it as operating profits - the sign of a return to financial balance. Its not enough, because in the world we live in, all companies have a huge problem with replacing and modernising their fleets. Aircraft are very expensive and we have to be able to replace the whole of our fleet if we are going to survive. That will mean investments roughly equal to a billion dollars by the end of the decade - which means we have to have a bigger operating profit than we have at the moment. So we are not out of the woods yet. But I have to say that we are a little bit ahead on the time tabling I had fixed, as I thought we would only manage to get the books balanced during the course of 1990 and we in fact did so in 1989.
· Why are you optimistic?
Its looking at the actual situation rather than optimism. Its seeing that we had positive results at the end of 1989 that I never thought we would achieve before the end of 1990.
As far as optimism about the future is concerned, there is one thing which does not depend on the Chairman of Air Afrique and that is the way the continent of Africa develops. If the economic crisis is coupled with a political crisis, as seems to be happening in some areas, it will have an effect on air transport, not just Air Afrique, but all the airlines. So it is getting more and more difficult to increase turnover in a contracting market as we have done the improvement last year was 10 % - and as we are still doing. In this sort of market, where there are still as many operators, increasing services means either making pricing sacrifices to the detriment of the total revenue or making considerable improvements to the services - and there is still plenty of room for improvement.
When I took over, the companys reputation was that it was unable to keep to its timetable and that booking was a matter of luck. I wouldnt go so far as to say that all this is now a thing of the past. There are still problems due to the fact that we dont have enough planes and this puts a strain on the fleet, because the slightest technical hitch calling for urgent servicing outside the regular service periods holds up flights for hours. We arent the only company to have this problem, but it tends to happen more easily to us because we dont have that many aircraft eight in all if you dont count the two cargo planes (no one makes a lot of fuss if goods arrive late, unless its fresh fish!) Two of our eight passenger planes are chartered, so that leaves six, properly speaking, for Air Afrique and its a big problem if one of them breaks down.
· The first thing you had to do when you arrived, was to lay off several hundred staff. How did you feel about it and, above all, how did you go about remotivating the staff who stayed?
Yes it really was a very difficult time and I realised that we had to get through it fast, because the credit I had - in theory I had been given an overall authorisation for all this in the recovery plan - what you might call a grace period, wasnt going to last long. I was convinced that it had to be done in the first six months. It had to be done quickly. At the same time, I wondered just how to go about it, arriving in a company where I didnt know anyone, where everyone knew there were clans and in - fighting and where, when you listen to what people tell you about what someone is worth, you wonder whether you arent being manipulated. So I wondered how to act fast before I had the time really to get to know people and what they were worth. It was a bit of a paradox, but I solved the problem by calling in some consultants to assess the staff and produce a rational staff plan based on the best management techniques and that gave us 1600 redundancies - i.e. a 30% cut, as we started with 5100 and ended up with 3500. We selected staff in the light of assessments of managerial and other staff in Abidjan - because tests were administered there and in Paris and Cotonou, although there were objections elsewhere. In the other cases, we were forced to use the rather silly criteria of collective bargaining, such things as last in, first out , which put long servers at an advantage. We negotiated it all and we went for dialogue, taking the time to convince the employers, the employees and the governments and negotiate the compensation. In some states, things went fast. In CdIvoire, for example, the Government made a very firm commitment to support the recovery programme because it was CdIvoire which, basically, was the sponsor and so that is where we began. We laid off 900 people there on 13 June, as this was where the biggest contingent was, because the headquarters are in Abidjan and that is where the companys most expensive managerial staff are. Things went a great deal slower in some places. The negotiating took about a month and a half in Senegal and quite a long time in Congo and it varied in other places. We never made staff cuts without a formal agreement with the trade unions and labour inspectorate, so we were able to avoid strikes and labour disputes. We were worried about vengeance and sabotage and so we took the appropriate precautions and had the installations guarded, but there were no attacks. All staff made redundant got the compensation which collective bargaining had provided for and even a little bit more and we were still able to introduce a social plan financed by external aid. And how did the staff who stayed take this? There was a certain amount of gloom and despondency. For example, there were cases where husbands were compressed (as the Africans put it) and wives werent and a lot of trouble caused on the domestic scene as a result. But those who stayed realised that they were highly privileged and that they had to earn this privilege with their work. This they understood. I am working hard on internal communications, sending every employee a personal letter from the Chairman, keeping people up to date with the results of their efforts and fixing new targets for the following weeks and months and I think it is going down very well. What is really good is that they feel that the team behind me is a united one and that everyone in it is striving towards the same goal. There really is a common aim which all the staff share, I think.
· Can you, as Air Afriques structural adjuster, tell us where you have got with the recovery plan? First of all, you had your financial balance to strike, with the reduction in staff and other costs. What are the next stages?
The next stage now is to come up with the new staff regulations. I found a situation with as many types of staff as states and jobs, and this interferes with mobility and creates frustration amongst the workforce.
And its a big job, because we have to contrive to reach agreement with the unions and the Ministers of 10 different States. I believe we will succeed. I have already managed to get an interstate convention adopted to ensure retirement pensions and social security coverage for employees who have moved about but havent so far been guaranteed any rights unless theyve stayed put for 10 years.
There are people who have spent their entire career with Air Afrique but ended up with ridiculous pensions because they worked in several places but never for 10 years. Its a very difficult problem indeed and they had been aware of it for some time. Texts had been negotiated but never adopted - but thats what I managed to do in February. What we have to do now is replace the fleet.
· People used to complain about Air Afriques performance in its main markets being lethargic. Some said that it let other airlines get the better of it for far too long and so they did well on the African market. You came along and stirred things up and Sabena, for one, felt the draught. Alitaliu wasnt all that pleased either. How are relations with them now? And how do you see things developing?
Im glad youve asked me that because its something people often misunderstand. I think that if we ended up asking the member countries of Air Afrique for some regulation of numbers of seats and frequency of flights, it was because we have proof that the airlines balanced their traffic by frequent recourse to what we call the sixth freedom (2) over France, because they didnt have traffic rights over France, but over other European countries unlike Air Afrique and the French airlines. But because of colonisation, the French speaking States of Africa do most of their economic and cultural trade with France and that is where the market is. Other airlines filled up their planes on the Abidjan and Dakar lines by taking passengers bound for Paris and that did us a lot of harm because they did it by offering rebates and cheap tickets and more frequent flights. The more flights you have on a particular line, the more possibilities of deflected traffic you create, obviously, because of timetables and days when there are no planes available. And even in places like Abidjan where we currently have 10 flights a week - there are flights every day, not to mention UTA, which has seven or eight a week, too, at the moment - so there are more than two planes a day, there is still some deflection of traffic.
We wanted to restrict this and it really caused acute problems with some states, but we have reached a modus vivendi for the moment - other than with Alitalia, which has suspended its regular Abidjan service and got its Government to ban us from serving Rome from Abidjan in return. But no other company has followed this example. Some of them, Swissair for example, have decided to sign a cooperation agreement with us, saying that they understand our problems and want the customers they lose to come to us and not to French or other European airlines. We havent got agreements with the other companies, but let us say theyve accepted it, for better or for worse. Originally the rule was one flight per week, but now its agreed that two are OK. And the arrangements are that there are specific numbers of seats and passengers which can be increased. We started by restricting the number of passengers to 100 per week and to 90 each way on some of the less important lines. We have always maintained this limit, but weve added tourists on inclusive tours, with an all - in price that includes services on the ground - these are the flights sold to tour operators - and, by and large this isnt deflection of traffic. Its proper traffic. Its generated by tour operators and so we are not restricting them at all. I think this can also help make it easier to implement our measures. The third thing I have to say is that these measures were presented as transitional from the word go, with the idea that the quotas would be stepped up as Air Afrique got better and we would ultimately get back to a normal situation where we tried to conclude trade agreements with the other airlines so everybody got something out of it.
· One of your main shareholders, UTA, has just been taken over itself, by Air France. Will this have any effect on Air Afriques activities?
I think it is still too early to say what effects Air Frances take - over of UTA will have on Air Afrique. It will all depend on the new strategy of the group. UTAs strategy, of course, was to say that, well, Africas given us a good living in the past, but it wont give the company much of a future. Our futures in Europe and Asia and on the Atlantic run. UTA was competing in Africa, but I dont have the feeling that it was the spearhead of its operations. One possible strategy is confining UTA to Africa without ultimate loss of its European hopes. Air France, as we have seen, has already started to serve the USA again from the provinces. So the people at UTA will be forced to take a much bigger interest in Africa again and I think this means they will go on being competitors. However, its an airline with the same rights as us, because it works with reciprocity of the third (3) and fourth freedoms over France and it will be very careful to maintain a balance in internal capacity. We havent noticed any difference so far. One thing is certain and that is that the repeated strikes at UTA - they were tied up with the companys European ambitions and a desire to cut its costs - have lost it some of its share in the market. But thats over and done with now, because, obviously, the Air France group has a totally different wage policy and that, I think, will help UTA get back on the market.
· You talked about the trauma of 1993 recently. What exactly do you mean?
I think - and perfectly reasonably too - that in 1993 there is going to be a Community transport policy which I would compare with what happened with fishing rights - we arent going to be discussing with the individual governments any more, but with the European Commission and theres no doubt that the Commissions powers of negotiation with Air Afrique are going to be far greater than those of the states individually. Secondly, we are going to find ourselves in a period of theoretically total deregulation in Europe and its going to be more difficult to maintain a balance with our traditional partners, Air France in Senegal and UTA elsewhere, since it is the Community we are going to have to deal with. We are going to have relations of a different kind and the trauma will be having no idea what is going to happen on the European side. Are we going to see a host of new operators like there were when the USA first deregulated, getting traffic rights all over Africa? That will mean we have to fight to restrict these new arrivals, because even if the inside of Europe is deregulated, the rule will still be a division of continental traffic between the African and the European transporters when it comes to serving the African market. And that wont be a very easy one to solve.
· Can you tell us how you see the companys future? What sort of Air Afrique do you want to leave behind you when you go?
My ambition, I think, is to make the company a means of bringing about genuine economic integration between the nations of Africa. Economically Africa suffers from a certain amount of fragmentation and balkanisation and Air Afrique is its unique example of regional transport cooperation. I think that there is nothing else like it in the world, apart maybe from SAS, which combines the Scandinavian countries, and Gulf Air in the Emirates. So I believe it is worthwhile. What I remember from the message from the head of IATA is that there is no future for you in air transport if you dont unite. So I think that Air Afrique is the way for an African state to remain in this industry. Maybe my ambition is to see other states join in too. When I see the impossible difficulties facing some airlines - some of which, like Air Mali, have been forced to suspend all their flights, while others, Air Gabon and Air Cameroon, for example, from the two countries which have left us (Gabon and Cameroon were founder members of Air Afrique) - I think that the Air Afrique formula is a good one.
· A financially sound Air Afrique would perhaps have more assets...
Yes, that is a sine qua non, I believe. If Air Afrique is to have a future, then there can be no question of a return to treating us as the sort of organisation where everyone takes out as much as they can without being willing to accept the slightest constraint.
· So you arent just trying to get back your traditional markets. Youre trying to branch out. too, for example to Brussels this yeur and maybe to other destinations in Africa...
Thats right. You know, if we havent been that far, to Brussels I mean, before, its because we didnt think there was enough trade to warrant it. And that is also why we have deflected traffic, because if we use our rights in Brussels - we have reciprocal rights with Sabena - I think that there will be less deflection. Those are things we have to think about. As I said, I should like people to stop thinking that you only take Air Afrique to go to France.
Interview by Roger DE BACKER