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Mozambique: LAM Must Prepare for Competition - Minister
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Agencia de Informacao de Mocambique (Maputo)
24 December 2007
Posted to the web 2 January 2008
Maputo
Mozambique Airlines (LAM) "must prepare for competition", since the government plans to open key regional routes to other air companies, Transport Minister Antonio Mungwambe has warned.
Interviewed by the Maputo daily "Noticias", Mungwambe said that currently each regional route is only operated by one airline per country. Thus the routes between Mozambique and South Africa are operated by LAM and South African Airways (SAA).
But in 2008 all the regional routes except Maputo-Johannesburg (which is the most frequent and the most profitable) will be opened to competition by more than one company per country, said Mungwambe. Among these routes are Beira-Johannesburg, Maputo-Cape Town, Pemba-Johannesburg, and Maputo-Durban.
Mungwambe said that Maputo-Johannesburg was being left out for the time being "because we still need to monitor the situation".
He was confident that this measure will mean more, and possibly cheaper, flights, and that more investors and more tourists will come to Mozambique.
He admitted that currently LAM is not prepared for this challenge, "but it must prepare itself, because the country cannot miss opportunities for growth in the aviation industry because of LAM's condition".
The Mozambican state (which still holds 80 per cent of LAM's shares) would help the company as far as it could, said Mungwambe, but actions taken by the company's own management would also prove crucial. "We have a company that we would like to see grow and compete", he stressed, "but the country cannot cease to grow just because this company, for some reason, does not grow".
LAM's accounts for 2006 were published on Monday, and they show that it is still deeply in the red. Overall losses for the year were 109.7 million meticais (about 4.5 million US dollars). This was an improvement on the losses of 130.8 million meticais made in 2005.
LAM could take some comfort from an operational profit of 51.8 million meticais (which compares with an operational loss of 11.8 million meticais in 2005). The main headache was a huge financial loss of 102.4 million meticais, resulting from interest rates paid to banks for short term loans, and interest still being paid on an ill-considered acquisition of a Boeing 767 in the early 1990s (unable to make money on this aircraft itself, LAM is currently renting it out to a Mexican airline).
LAM has suffered from the sharp rise in the price of jet fuel, particularly since its ageing fleet of Boeing 737s use much more fuel than modern aircraft. The company thus urgently needs to acquire newer aircraft for its domestic and regional routes.
Mungwambe said there is already a proposal to renew the LAM fleet "and I think we shall advance with actions in 2008". These actions, however, would be limited to approving a programme for purchases, since the heavy international demand for new aircraft meant that, even if an order were placed today, it would not be met until 2012 or 2013.
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"So we shall approve the programme, and see how to implement it", said Mungwambe. "The programme will indicate where we can look for new equipment, even if this is through leasing".
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| Copyright © 2007 Agencia de Informacao de Mocambique. All rights reserved. Distributed by AllAfrica Global Media (allAfrica.com). To contact the copyright holder directly for corrections -- or for permission to republish or make other authorized use of this material, click here. | |||||||||||||||||||||||||||||
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