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Tunisia: situation in Tunisair is very difficult, but not catastrophic or desperate, says new CEO

Rabah Jrad does not probably know Tunisair too much. He is not, indeed, an aviation technician. He is a manager with long years of experience in STEG. His knowledge of employment issues and of big companies has obviously put him at ease by telling us about figures of a company which he has assumed the presidency for only two weeks now. A position which no one would envy him for, with the difficulties facing Tunisair, under repeated surges of pressure from the labor union and the tourist situation that does not always turn pink. It is therefore with a CEO, who has just taken up duties, that we talked about all this. Interview:

How is the financial situation of the company given the figures of the first two months of the year?

You know that 2011 was difficult for Tunisair as it was for the country. The impact of the crisis and post-revolution affected the company with the regression of activity, especially in charter flights. The impact was however less significant in regular flights. The year 2011 ended with a projected deficit that was significant…

It will still not exceed 250 million dinars…

No, much less. It was estimated at 200 million dinars. However, we expect to confirm the figures that will be validated by the auditor. Indeed, the results were better than what was planned. The figures of the first two months of the year are a little more reassuring. They even exceed those of 2010. Compared to those of 2010, they were up 10%, particularly with respect to regular flights. We hope that with the return of tourism, on which the forecasts are better than last year, the results of 2012 will be better than 2011. With the impact of the reinstatement of several agents, the result is not going to be positive in 2012. There will be an increase in charges.

We will do everything to cut costs and they can be, without affecting the quality of service of the company. But 2012 will record an improvement over 2011, and in 2013 with the recovery plan which we will establish soon, and thanks to which we hope to balance the situation in late 2013.

But why do you explain the cries of alarm from trade unions and even your appropriate Minister who speaks of catastrophic situation?

The company has not honored its commitments to certain providers, such as OACA vis-à-vis which it has debts, and to the CNSS. This makes that there is a deficit in cash. Operating loans are at 80 million dinars. The bottom line is that the debts vis-à-vis our usual suppliers are honored. There remain the OACA and the CNSS. With the CNSS, we are heading for a way to solve the problem. Regarding the OACA with which we are under the same umbrella, we will meet to possibly propose to the government how to solve the problem. We’ll certainly find the solutions that satisfy each other.

When the company is forced to postpone some deliveries, incurring operating credits, and investment credits, this can only add expense. This is to be added to the impact of all that is related to the reintegration of subsidiaries, with all the staff that are integrated and the alignment of salaries. All these expenses are not offset by an improvement in sales…

Will not all this affect the continuity of Tunisair services?

Instead, we attach importance to improving service quality, because it is the basis for having new passengers and recover those lost by Tunisair. Service quality, this is one of the first targets of the improvement process, not to mention security. We are uncompromising when it comes to security. Tunisair has never had a problem at this level. It has had problems with punctuality, a problem that will be settled as part of our plan to improve service quality. We will also do everything possible to reduce delays. There are still some disturbances, but an improvement is noticed. As I have said above, the 2012 results are reassuring on the outlook for the current year. We will subsequently adopt the right policy that will end any wrongdoing, to cut costs and bring exogenous factors under control. Fortunately, now we no longer have any external intervention or interference from anyone in the management of the company.

Why do we talk about corruption in Tunisair? Is it because there too much within the company? When we talk of a Management that was working to kneel Tunisair to give it then to families, is there union’s overbidding behind this?

What I can say is that the National Commission for fight against corruption has requested some records and that Tunisair has sent a whole bunch of files that were requested by the commission.

Can you provide information on certain topics?

Information was given on questions that were asked by the commission about certain topics, and documents requested by the Commission that were sent to it. Second thing: the Prime Ministry sent an inspection team, who has been working for nine months. The commission has not yet completed its work. Tunisair has made available to the independent commission whatever it needs to do its job without any intervention.

What about Tunisair representations abroad?

We have different representations abroad. There is within a company an audit and inspection directorate. Each time there are reports that some things do not work, the inspection directorate conducts inspection procedures at the request of the general management.

Today, there are two representatives who were brought before the Disciplinary Board following audits. They are blamed for mismanagement.

The first representative concerned was in Amsterdam. He was transferred to Dakar. The second is in London. He was brought before the disciplinary board, and we await the decision of the board.

We will then see the result of the commission of the Prime Ministry if it will audit some agencies and representatives. There are echoes of some, we will target the most important representations to inspect them and make sure there is not mismanagement and if any, we will take appropriate action.

There is talk about restructuring of subsidiaries. Is there going to be reconversion of branches of all the old companies?

An agreement was signed in February between the union, the ministry and the company. We respect the commitments. We’ll see how to apply it. There in an early application. We will not reconsider the agreement and we will see later with the union.

Do you have in mind a draft restructuring and rescue plan for Tunisair?

There is a draft that was made by my predecessor and was sent to the Minister of Transport. It is a recovery plan, following an audit that was conducted by a foreign company. We will undertake a consultation to discuss its updating with the company officials.

We will establish this plan in the near future and announce it to the company’s staff, because it requires that all units of the company be involved, seeing that the rescue of a company can be done only by its own executives and agents.

What are the main orientations of this plan?

I would say we are dealing with a difficult situation but not overwhelming. We will find an arrangement for creditors. This will help us put off the debt settlement. There is the flight plan that is being examined. There was a time for us to decide about it. Finally, there is the issue of the sale of presidential planes which is on the table, and we hope to find buyers quickly so that this operation may ease some of our credits and repay part of the sale that was made and recover the price of the plane that is already amortized, allowing us to have a breath of fresh air.

On the other hand, we will compress all expenses and close all the gaps that existed before and initiate the staff to improving productivity and getting involved in the rescue of their company. We will study the existing lines and existing representations to see those that do not have a definite profit, and take decisions to establish a new organization which the study shows that they were not useful, and consider opening new lines.

And what about that famous new plane, was it sold or not?

Not yet. There are potential buyers who have expressed their intentions, but are being evaluated. There is a National Commission that was decided by the government to deal with this issue but so far there have not been concrete offers with figures.

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