15 February 2019

Zimbabwe: Malaysia Rejects Aircraft Deal Reversal

Photo: New Zimbabwe
Zimbabwe Airways.

Malaysian Airlines has turned down the Zimbabwean government's request to reverse a deal for the purchase of two Boeing 777 planes and threatened to take legal action for breach of contract, insiders said this week.

Government initially entered into a deal in 2017 for the purchase of four jetliners, but now wanted to negotiate for two after failing to raise US$70 million for all of them.

The planes, which were initially sourced for Zimbabwe Airways (ZimAirways), will now go towards the revival of the troubled flag carrier Air Zimbabwe.

Transport minister Joel Biggie Matiza travelled to Kuala Lumpur earlier this year to try and sell the new government position to the Malaysian Airlines executives without success. He told a media briefing in Harare last week that government would now proceed with the original deal for the four planes.

Harare had paid for one plane in full and made a 10% deposit for the other. It had not commenced payments for the remaining two.

Government sources told the Zimbabwe Independent that Matiza's proposal was shot down by Malaysian Airlines, which said government has no choice but to honour the subsisting contract or risk facing legal action for breach of contract.

"The issue is that the Malaysians did not want the original agreement altered and insisted on honouring the contract. Even before the trip to Malaysia was made, everyone knew that there was a high possibility for the authorities there to threaten legal action," a government source said. "They were told that the 2017 sale agreement was legally binding and Zimbabwe risked blacklisting by foreign airlines if it does not revert to the original plan."

In an interview last week, Matiza said the planes would be delivered in the next three months.

"We agreed on the way forward. We should see our planes delivered within the next two to three months. The process of payment has already begun," Matiza said.

An aviation source privy to the proceedings said the deal was brought back on track after both sides made concessions.

"Discussions were held and some concessions were made. Work is in progress to meet the conditions given by the Malaysians which include some outstanding payments to enable the planes to come," the source said.

The delivery of the aircraft is expected to boost Air Zimbabwe's depleted fleet which has two aircraft, one of them currently grounded.

Reports also suggested that Malaysian Airlines was now getting concerned about the state of neglect of the planes as they have not been serviced for a long time. Zimbabwe is also expected to pay an undisclosed amount in service fees.

The four Boeing 777s are currently in bad shape and one had to be cannibalised to fly to Harare before it was flown back to Kuala Lumpur for routine maintenance.

Cannibalisation of machine parts is the maintenance of mechanical or electronic systems with interchangeable parts.

The state-owned Air Zimbabwe owes creditors over US$341 million.

The administrator, Grant Thornton, has been given up to end of May this year to ensure the turnaround of the airline, secure investment partners and open new routes.

Air Zimbabwe was placed under reconstruction in September last year to ring-fence the airline's assets which have been under threat from creditors seeking litigation.

Zimbabwe

U.S. African Policy's Lost 'Dynamics'

At the US-Africa economic summit, stakeholders from both sides meet to discuss future business. Africa's political elite… Read more »

See What Everyone is Watching

Copyright © 2019 Zimbabwe Independent. 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.