The world's largest private equity fund, Blackstone, is reportedly close to completing a $500 million investment to take control of Trans Maldivian Airways (TMA), the world's largest seaplane operator.
Blackstone's return to TMA after eight years represents a remarkable move, as the firm played a significant role in the company between 2013 and 2017. The acquisition comes as the Maldives tourism industry is recovering from the impact of the COVID-19 pandemic and returning to growth. Blackstone is now acquiring TMA for nearly the same price at which it sold its shares in 2017.
The revival of a business
However, economic conditions have changed dramatically since Blackstone sold its majority stake in TMA to a consortium led by Bain Capital and the Chinese conglomerate Shenzhen Tempus Global Business Services Holdings. In the period following the sale, the aviation industry was severely impacted by the global health crisis. Tourism, a key driver for TMA, experienced a dramatic decline due to the pandemic, which also impacted the company's value.
According to reports from the Economic Times from India, Blackstone now appears willing to pay the same amount as in 2017—around $500 million—to acquire a majority stake in TMA. This could be interpreted as a kind of "buyback" of the company, which originally cost Blackstone $98 million. The decision by Bain and its Chinese partners to acquire TMA at the time was a response to the booming luxury and tourism market in the Maldives, which had proven extremely profitable until the outbreak of the pandemic.
A difficult path for Bain Capital
However, Bain Capital's hopes of acquiring TMA and linking it to luxury tourism in the Maldives were dashed by the pandemic. Global travel restrictions and restrictions on international air traffic led to a massive decline in tourists traveling to the archipelago. The new owners' financial problems escalated when they took out a $305 million loan to finance the acquisition but were unable to repay it due to market developments. This led to creditors, led by the Carlyle Group, taking control of the company.
As a result of this crisis, TMA underwent a restructuring that enabled the company to survive the difficult period thanks to the commitment of new creditors, such as the Carlyle Group. This financial reorganization led to the current situation, in which Blackstone is now in a strong position to repurchase the company. Reportedly, the current owners, who had originally hoped for a sale price of around $700 million, were now willing to settle for a lower amount of $500 million, which seems a reasonable decision given the volatile market situation.
The importance of TMA in the aviation industry
Despite this turmoil, Trans Maldivian Airways remains a key player in Maldivian air transport. The company is the world's largest seaplane operator and the largest operator of De Havilland Canada DHC-6 Twin Otter seaplanes. With a fleet of 59 DHC-6-300s, three DHC-6-400s, two DHC-6-200s, and one DHC-6-100, TMA plays a vital role in inter-island air traffic around the Maldives. This is particularly important given that the country is comprised of over 1.000 islands that need to be connected over short but long distances.
Since TMA's merger with Maldivian Air Taxi, another seaplane operator, in 2013, the company has established itself as the undisputed market leader. Today, TMA faces competition from other providers, such as Manta Air and Maldivian, which also operate in the island sector. However, this competition remains relatively limited, strengthening TMA's market position.
Tourism boom and the return of Blackstone
After the difficult years of the pandemic, tourism in the Maldives has now recovered. According to recent reports, the number of tourists visiting the country has already exceeded pre-pandemic levels. Male-Velana International Airport (MLE), the main airport in the Maldives, is seeing a growing number of flights from various parts of the world every day, which is also benefiting TMA. The company can now capitalize on the increasing demand for exclusive tourism services, in which seaplanes play a key role.
Blackstone could use this market recovery to make Trans Maldivian Airways an even more profitable company. Given the growing importance of the luxury travel market and the growing number of tourists preferring private and customized services, Blackstone's acquisition of TMA could be a successful long-term strategy. Moreover, Blackstone already has experience with similar investments in the aviation industry and could benefit from this expertise.
Blackstone's return to Trans Maldivian Airways demonstrates how dynamic and volatile the aviation industry can be. What appeared to be an unprofitable and risky deal could prove to be a prudent move in today's economic climate. By investing in TMA, Blackstone can not only benefit from the revival of tourism in the Maldives but also secure a valuable market position in the growing luxury and travel market. It remains to be seen how the company's strategic direction will evolve under Blackstone's leadership, but the potential for a profitable future appears to be there.
and 