Blackstone is close to reacquiring Trans Maldivian Airways for nearly its original selling price, eight years after selling the operator for $500 million. The airline faced bankruptcy and restructuring after the pandemic. Despite initial success and a notable investment return, the subsequent owners struggled to address operating challenges in the leisure travel sector, leading to lender control. Current valuations range from $550 million to $700 million, with muted interest from buyers due to risks in the sector.
Blackstone is nearing a deal to reacquire Trans Maldivian Airways (TMA), a seaplane operator, approximately eight years after selling it for $500 million. This acquisition is occurring at nearly the original selling price, following a challenging period for TMA that included bankruptcy and subsequent debt restructuring, which occurred after the pandemic severely impacted operations. This move marks a significant return for Blackstone to the seaplane charter operator, which is the world’s largest in its category.
In 2017, Blackstone completed a notable exit by monetizing its $98 million investment in TMA for $500 million to a group led by Bain Capital. The return of 4.8-fold constitutes one of Blackstone’s most successful investments in Asia, particularly emphasizing the India franchise. Post-sale, however, Bain Capital’s attempts to capture the luxury travel market benefitting from Asian and European tourists were thwarted by the pandemic, leading to operational difficulties, including a failure to repay a $305 million loan.
Following the debt crisis, control of TMA shifted to lenders, which included a new consortium led by Carlyle and King Street Capital Management. The Bain acquisition was initially financed by banks, including Deutsche Bank, which was tasked with the sale of the business in the wake of the travel sector’s recovery efforts. TMA reported $177.9 million in revenue in 2024 and anticipates $70-$80 million in EBITDA for the current fiscal year.
Various private equity firms and prominent business houses were approached for potential interest in TMA, yet many chose to refrain from engaging due to the inherent volatility of the travel sector. Lenders have estimated a valuation of between $550 million to $700 million, but interest from prospective buyers has been muted at this price point. Currently, TMA operates a fleet of 65 DHC-6 Twin Otters and connects over 80 resorts across the Maldives, undertaking more than 400 daily flights.
The pandemic led TMA to modify its operations by suspending scheduled flights and shifting to an on-demand service, underscoring its deep ties with the travel and hospitality sectors. As competing travel markets like India and China vie for dominance in Maldives tourism, trends remain fluid into 2024.
In conclusion, Blackstone’s potential reacquisition of Trans Maldivian Airways signifies a substantial shift in ownership dynamics within the airline sector, particularly after the company grappled with the impacts of the pandemic. Following significant profit during Blackstone’s previous involvement, the firm is poised to reclaim its asset amidst changing market conditions. Given the volatile nature of travel, future prospects remain uncertain, relying heavily on global tourism recovery and operational adaptability.
Original Source: infra.economictimes.indiatimes.com
