9/20/2001: France's AOM and Air Liberté Take the Name Air Lib

DALLAS — Today, in 2001, the French carrier assembled out of AOM and Air Liberté began trading as Air Lib. The National Assembly commission of inquiry that later took the collapse apart records that Société d'exploitation AOM Air Liberté, entered in the commercial register on August 24, 2001, was known as Air Lib from September 20; the International Directory of Company Histories puts the two airlines' formal merger two days after that.

The name went onto an airline that had never been properly put together. Taitbout Antibes BV, a subsidiary of the French group Marine Wendel, and Swissair had bought AOM Minerve and then Air Liberté in turn, and brought AOM Minerve, Air Liberté and TAT together through a recapitalization of the holding company AOM Participations worth 1.99 billion French francs in December 2000. From January 1, 2001, AOM ran Air Liberté's business under a management lease, an arrangement the inquiry was careful to distinguish from a merger: it can be undone, and it leaves staff on their old terms. Marc Rochet, put in charge in February 2001, was handed the restructuring without the time to integrate the old companies for real. On June 15, with the majority shareholders refusing to put in more money, the company filed for insolvency, and the commercial court in Créteil opened court-ordered reorganization four days later, finding the two businesses so intermingled in staff and equipment that it treated their assets as a single estate.

The court authorized the takeover on July 27, 2001. It went to Jean-Charles Corbet, a former Air France pilots' union leader whose Holco vehicle put up no capital of its own but held a protocol under which Swissair would contribute 1.3 billion French francs. Only 1.05 billion of that, about €160m, was ever paid. SAirGroup and SAirLines failed at the end of September, three weeks after the September 11 attacks; the inquiry records traffic in the United States halving in the weeks that followed, and Air France, which took the shock better than most European carriers, down 7%. Belgium's Sabena, another airline Swissair had bought into, made its last flight that November.

So Air Lib went to the French state instead. The Fonds de développement économique et social, the state's economic and social development fund, put up a €30.5m loan in January 2002. The inquiry found the application processed in three days, over the finance minister's unfavorable opinion and on the transport minister's insistence, and paid in two installments; the airline also stopped paying its social and public charges. Low-fare trials had already run in November 2001, and Air Lib Express launched on March 31, 2002 on routes out of Paris Orly (ORY) to Nice, Toulouse, Toulon, Lourdes, Perpignan and Marseille. The International Directory of Company Histories records the no-frills service being announced that March along the lines of easyJet (U2) and Ryanair (FR). The inquiry's verdict was blunter: Air Lib Express did not match the low-cost model and should be counted a low-fare product, sold at prices the airline's costs could not support. By July, consultants reporting to the French civil aviation authority were calling the average fare on Paris–Marseille dangerously low.

The money bought time and nothing else. Air Lib reached cessation de paiements, the point in French law at which a company can no longer meet its debts as they fall due, on February 13, 2003, and the Créteil court pronounced its liquidation four days later. The inquiry put the airline's debt to the state at €130m.

Air Liberté

Air Liberté was born in July 1987 and began operations in April 1988. It worked the resorts of southern Europe and the Mediterranean and reached as far as Bangkok and Montreal.

British Airways (BA) took it over at the turn of 1997, with a bid of FFr440m for a 67% stake that the commercial court accepted. Air Liberté was in court-ordered reorganization at the time, which is why a court was choosing its owner. BA organized a tie-up with TAT European Airlines, and from April 1, 1997, Air Liberté operated TAT's business under the same sort of management lease later used on Air Liberté itself, leaving both companies standing rather than merging them. Air Liberté's parent, Participations Aéronautiques, passed on May 4, 2000 to Taitbout Antibes BV, acting in agreement with Swissair.

AOM French Airlines

Air Outre Mer, also formed in July 1987, was built to connect France with its overseas territories, and flew its first scheduled commercial service from Paris to Réunion on May 21, 1990. The inquiry dates the constitution of AOM Minerve, the company that came out of its combination with the charter operator Minerve, to September 1990; the International Directory of Company Histories puts the merger that produced the AOM French Airlines name on January 1, 1992. In 1995 it flew 2.4 million passengers with eight MD-83s and 14 DC-10s, over a network that ran to Australia, Peru, Cuba, Los Angeles and Tahiti.

Its sale was announced in February 1999 and took effect on August 25 that year, when the Consortium de Réalisation, the French state vehicle holding AOM's parent, sold 50.38% of AOM Participations to Taitbout Antibes BV and 49.5% to Swissair's SAirLines. Swissair was then buying minority stakes across Europe on the strength of a 1998 McKinsey report that told it to hunt; Institutional Investor counts Air Littoral, AOM French Airlines and Air Liberté among the carriers it took 49% of.

What Came After

Patrick Ollier, who chaired the commission of inquiry, sent its report, annexes and conclusions to the Paris public prosecutor. Corbet was convicted in September 2007 of abuse of trust and misuse of company assets and sentenced to four years, 18 months of them without suspension, with a €300,000 fine; France's highest appeal court rejected his appeal on June 30, 2010, making the sentence final and confirming those handed to Yves Leonzi and Christian Paris.

The featured image shows a McDonnell Douglas DC-10-30, F-GPVA, in Air Lib Express colors at Orly in early 2003, in the weeks before the liquidation. The International Directory of Company Histories describes the logo that arrived with the new name as blue and orange, said to symbolize the sun shining above the ocean.