12 February 2013

Zimbabwe: Air Zim Debt Baloons to U.S.$188 Million

Air Zimbabwe's debt has risen from US$140 million to US$188 million during the last 12 months, the Parliamentary Portfolio Commitee on Transport and Infrastructure Development heard yesterday.

Giving oral evidence before the committee, permanent secretary for Transport, Communications and Infrastructure Development Mr Munesuishe Munodawafa, in his capacity as acting board chairperson, said that US$158 million of the debt was local, while US$30 million was foreign.

"In order for the airline to resume operations in earnest, it would be ideal that the external debt be serviced first in order to have access to regional and international routes," said Mr Munodawafa.

"Last year, we received US$8,5 million from Treasury that we used to pay part of our regional external debt, hence we have been able to resume the flights to destinations like Johannesburg in South Africa."

Mr Munodawafa told the committee that Air Zimbabwe would have a new substantive board that would be announced on February 22, after one-and-a-half years with the airline operating without one.

He said since the dissolution of the previous board, Air Zimbabwe had engaged a consultant - Ernst and Young - to help come up with a business strategic plan that would be implemented by the new substantive board.

Mr Munodawafa bemoaned the huge debt overhang, saying that it was scaring away potential strategic partners and investors.

"The other problem with potential investors is that there is a mismatch between the Air Zimbabwe fleet and its staff complement," he said.

"The fleet is old and now expensive to run, while there have been travel warnings against Zimbabwe by the West.

"As it stands, the size and value of Air Zimbabwe would make it difficult for a strategic partner to re-coup investment."

Mr Munodawafa said they had since October 2011 recommended that the Government assumes the Air Zimbabwe debt, streamline operations including retrenching, look for a strategic partner and re-brand the national airline.

When asked by the committee chairperson Mr Blessing Chebundo whether Air Zimbabwe had achieved targets set for it by the Minister of Transport last year, Mr Munodawafa said they had not.

"Air Zimbabwe has not achieved the target set of operating at 100 percent locally by December 2012 and we don't expect to meet the target of operating at 100 percent regionally and internationally by June 2013," said Mr Munodawafa.

"At the moment, we have two Boeing 767s, with one being operational for regional routes and the other undergoing service at a cost of US$400 000."

"We also have three Boeing 737s with one operational and two in need of service. Also on the fleet are two A320 Airbuses with one having been flown to South Africa this Sunday for a bridging check and will be certified in about five weeks time."

Air Zimbabwe also has three MA 60s, with two being operational while the other was damaged in an accident involving wild pigs at Harare International Airport last year.

Acting Air Zimbabwe chief executive officer Mr Innocent Mavhunga said the airline had failed to retrench 409 employees after the exercise was ruled illegal by the Labour Court.

He said the workers were being paid a fraction of their salaries, while part of the US$8,5 million they received from Treasury last year was used to settle some of the salary arrears of the workers who had gone for 11 months without getting their dues.

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