Tunisair Restructuring Sidesteps Privatization, Tests State Finances

Tunisia is overhauling its support for loss-making flag carrier Tunisair through a TND 150 million (USD 51.5 million) bond issue and new credit lines, explicitly ruling out privatization. President Kaïs Saïed has vetoed any sale, denouncing those who "dream of seeing this institution sold to private interests" and declaring a cession "out of the question." The shift moves the carrier from open-ended cash injections to state-backed debt instruments and bond markets.

The liquidity package includes a USD 15 million credit line arranged via the Central Bank and the Arab Trade Financing Program, alongside a TND 35 million loan from state-owned Banque Nationale Agricole. A broader capital increase of TND 1.2 billion is planned, coupled with the expedited sale of grounded aircraft. These measures aim to fund operations while a restructuring plan eliminates 1,200 jobs over three years at a cost of TND 170 million.

Despite these structural efforts, the equity market sees little value in the airline. Shares on the Tunis Stock Exchange languish near historic lows of TND 0.37. Transport Minister Rachid Amri has publicly described the carrier's debt burden as "alarming." This reality is confirmed by the US Department of Commerce, which notes the company "remains heavily subsidized by the government" while suffering from chronic deficits and an inflated staff-to-aircraft ratio.

The government’s compromise is a search for a "strategic partner," but strict parameters will likely deter serious institutional capital. Any stake is capped at 49% or less, ensuring the state retains absolute control. Analysts warn that without full management control, rational private investors will avoid an entity that requires continuous state life support.

Tunisair's financing strategy is a microcosm of Tunisia’s wider fiscal stress. The nation holds external debt above USD 40 billion, with the public debt ratio projected to reach 80.5% of GDP by 2025. Reforming state-owned enterprises is a central condition for International Monetary Fund and Western donor support. By keeping Tunisair on the state books, Tunis consumes scarce fiscal resources and relies heavily on an implicit sovereign guarantee to place its corporate debt.

The carrier is simultaneously being leveraged as a tool of "economic diplomacy," with planned long-haul routes to New York, Washington, and China by 2028. Analysts observe that several of these routes lack commercial logic, driven instead by a political strategy to position Tunisia as a bridge between global powers. Minister Amri announced that 14 aircraft will return to service by May 2025, formally "without resorting to privatization."