Tunisia’s flag carrier airline Tunisair is saddled by debt while its newest, Sfax-based competitor Syphax airline is looking to expand its travel offerings across the world.

In 2012, Tunisair recorded a net loss of 72 million ($47 million), announced its CEO Rabah Jrad in public statements last month. Nevertheless, the majority state-owned company “found its normal path” last year, claimed Jrad, pointing to an annual number of 3.8 million passengers and an average of daily 100 flights.

In response, Minister of Transport Abdelkarim Harouni presented a plan to put the company’s balance sheet in order, improve competitiveness, and review its business and investment strategy.

Tunisair will seek to expand its services in Africa from four to 20 destinations, including the Democratic Republic of Congo and Burkina Faso, by 2016.

After adding three new offices, it has seen its payroll burgeon unsustainably. As a result, Tunisair is taking drastic measures to cut down a bloated bureaucracy of around 8,000 personnel. By 2014, it will eliminate 2,000 jobs in total. 300 employees will be asked to enter retirement while 1,700 others will be granted early retirement, said Tunisair spokesperson Soulefa Mkadem. All those asked to go into retirement will be given a pension from the airlines.

The national flag carrier aims to increase its capital from 106 to 180 million dinars, modernize its fleet with an investment of around $950 million, and purchase 16 more airplanes.

To reach all these ends, Tunisair requires more funding from the government as well as its guarantee in order to take out credit on international markets.

It remains to be seen to what extent the government can meet Tunisair’s financial demands.

Syphax airline has announced that it is expanding its international services; it plans to offer flights from Djerba and Sfax to major cities in neighboring Libya as well as long-distance trips to Montreal, Canada.

This announcement of Syphax caught the Tunisair CEO by surprise.

“I wonder how a young company can open a line to Montreal,” Jrad said in an interview with Tunisian radio Express FM.

This bewilderment came amidst accusations against Syphax of unfair competition.

Syphax has not followed an agreement penned by both competing airlines, which stipulates that the Sfax-based airline can only travel anywhere within the country on three days of the week, said Mkadem.

CEO of Syphax Mohamed Frikha denied such charges in a interview on Express FM and claimed that Syphax never sought to go against the interests of the national airline and what is in the interest of Tunisia.

Amira Masrour contributed reporting